Henry Newman is Director of Open Europe.

It has become clear that the Cabinet has reached broad agreement that the UK will transition out of the European Union. Although the Prime Minister and other ministers had left the door open before to “phasing” or “implementation periods” for elements of Brexit, the Government is now advocating a period of much greater wholesale continuity after we formally leave the EU. The Chancellor is suggesting a transition period of up to three years between March 2019 (the end of the Article 50 process) and June 2022 (by when the next General Election must be held).

The idea that the UK will seek a transition period of up to three years marks the most significant development in the Government’s Brexit policy since the Prime Minister’s Lancaster House speech in January. The policy is long overdue an update. There are rumours that Downing Street is planning a major speech for September, but that the intervention might not be led by Theresa May. That would be a mistake. Only the Prime Minister can provide the necessary clarity over the Government’s position.

Agreeing some sort of transition is sensible – it will help reassure business and the public. In an ideal world it may not have been necessary, but it is needed now because, simply put: Britain isn’t as ready as it ought to be. The comments of Sir Amyas Morse, the Auditor General, that the Government’s Brexit plans could collapse like a “chocolate orange”, were intended, I understand, to highlight the lack of preparedness of civil servants, as much as a failure by ministers to make key decisions. Others inside Whitehall are less optimistic than Morse – warning that at least an orange, even a chocolate one, has form. A transition will give time to pick through some of the complexity of Brexit, and to get the right people, systems, and plans in place. But the Government needs to shift gear and make more progress.

What will this transition actually entail? We don’t yet know. Firstly, nothing has been formally published or set out by the Government. The policy has been floated in a series of briefings and interviews. Secondly, as the Chancellor pointed out, the transition will be subject to negotiation with the EU. What we do know is that it will be intended to smooth the path between where we are now and a future treaty-based relationship with the EU. Crucial questions remain unanswered – for example, whether we will be subject to the European Court for the transition.

The Financial Times suggested recently that an “off the shelf” transition model was the preference – which would imply either temporary dual EEA/EFTA membership as advocated by Nick Boles, or the Lord Owen solution of EEA membership for a time-limited period. But whatever the attraction of either of these options, they cross a red line for certain Brexiteers. Steve Baker said it was like putting “blood in the water to even talk about the EEA.” In any event, neither option resolves the question of how to transition out of the Customs Union, as only tiny Monaco is in the Customs Union and outside the EU. Downing Street and others are downplaying the idea of an “off the shelf” transition. That would mean that Brexiteer red line is safe but that the Government will have to negotiate a bespoke option.

For the last few weeks, the Chancellor has repeated a mantra that in March 2019, the UK will leave the Single Market and the Customs Union, as it leaves the EU. There is a danger that those remarks will look disingenuous, if the UK essentially preserves aspects of those institutions through a transition. Yet the Chancellor’s words are intended for a specific audience – he is seeking to reassure those who are concerned that a transition could be some sort of “Blairite-Osbornite-Mandelsonian plot” to suck Britain back into the EU, or to lock Britain in the EU’s outer orbit. He is making it clear that even if the transition preserves much of the Single Market and the Customs Union, we will be formally outside those institutions, thus assuaging the concerns of certain Brexiteers. So the FT’s suggestion of an “off the shelf” solution seems wide of the mark.

There is a danger that ministers are being too clever – saying something technically true but by which the public could feel misled. This was reinforced by Brandon Lewis’s remarks that Free Movement will end by March 2019. The explanation that he was referring solely to (capital ‘F’ and ‘M’) Free Movement as mandated by the EU, seems rather weak, especially given the confirmation by his boss the Home Secretary that something very close to free movement would continue for a transitional period.

The purpose of a transition is to allow as much as possible to stay the same the day after Brexit as before. It will mean a process of gradual divergence for the UK. The Government should not synchronise all of its transitional plans and there are already suggestions of some instances where there will be differences. There’s a strong case for establishing an independent customs policy, faster than we depart from the Single Market. And if much is staying the same, for example with free movement largely unaffected, the Government will be keen to demonstrate change in areas such as fisheries. Crucially, a transition will help with the single biggest dispute between the UK and EU – the Brexit Bill. It will be easier for the UK to justify a bigger bill, which will smooth a better deal with the EU, if it can present this as ‘pay to play’ for the transition period.

Meanwhile, as the Government’s Brexit policy seems to be coming together, Labour’s seems to be fracturing. Their explicitly ‘have your cake and eat it’ argument, seeking the exact same benefits outside the EU as inside, was always an impossible position. Over the last few days there have been splits and spats since Jeremy Corbyn used a Marr Show interview to confirm that leaving the EU meant leaving the Single Market. Since then, Barry Gardiner, Labour’s Trade spokesman, backed leaving the Customs Union, while Diane Abbott, the Shadow Home Secretary, said the Single Market was still on the table. There’s a real opportunity for the Conservative Party to unite behind a sensible Brexit policy and outflank Labour.