Brexit – the final countdown?

Are we entering the final countdown to Brexit? Logically, there are three options, to leave without a deal, to leave with a deal and obviously not to leave. The probability of each outcome depends on perspectives taken.

As things stand, there is only one deal available, what has become known as the Withdrawal Agreement (WA). It is worth considering for a moment how this has come about.

From the EU perspective, this has been put together by the European Commission, the key figures being one of the EU Presidents, Juncker, with the lead negotiator being Barnier. The negotiating schedule was constructed by the EU. The position has been endorsed by the Council of Ministers, the heads of state of remaining 27 members.

On the British side, originally a department, DExEU was created. Since the infamous Chequers meeting in July 2018, the negotiating lead came from the Cabinet Office, in the form of Olly Robbins.

The resulting WA has been put to the House of Commons three times, failing on each occasion. The most cited reason is the existence of the “backstop”. This is a device, ostensibly at least, to ensure that there is no hard border between Northern Ireland and the Republic of Ireland.

Summaries of the backstop can be expressed in many ways, ranging from an insurance policy to shifting the effective border to the Irish Sea, allowing for freedom of movement on the Emerald Isle. Although this is presented as an interim position, there is no fixed end date, nor agreed mechanism to bring it to a conclusion. In fact, the WA is designed as the basis for a future relationship between the UK and the EU.

As things stand, over the last week, many of the key players and supporting cast within the EU have confirmed their long standing position. Juncker, along with French President Macron and a pawn in the game, Taoiseach Leo Varadkar, have all reinforced the EU position that the WA can not be changed, that the WA is non-negotiable.

Whatever has gone on behind the scenes between Theresa May’s team and the EU, debate has been prolific in the single open democratic forum for perspectives to be aired, the House of Commons. After three attempts, it is clear that the WA will not pass as long as the backstop is part of it. Ostensibly, the EU not being prepared to compromise and Parliament not willing to accept, the options would seem to be narrowed.

Of course, the EU have their position and have experience in negotiations on the world stage. It may be that at this stage, there is a ploy to change the backstop at the last minute, putting pressure on the UK to accept other conditions such as the divorce payment, fishing rights and the ability to obstruct competitive British trade and taxation policies to mention just a few. Draft alternatives to the WA probably already exist in Brussels.

There is a significant cohort in Parliament that would take “no deal” off the table. In the absence of an acceptable WA, their position by default becomes to remain in the EU, revoking Article 50.This may explain opposition to “no deal” from Conservative politicians of an age not to want to sit for another 5 year term, lucrative directorships from EU based banks or conglomerates being available to those with influence, providing generous salaries on top of indexed linked pensions. Their balance of power could be crucial.

To be successful, in removing the “no deal” option, opposition parties require an element of the Conservative Party to openly confirm that they had accepted ministerial positions despite not having been committed to the manifesto under which they gained power.

Taking an alternative perspective, in his maiden appearance as the new Leader of the House, Jacob Rees-Mogg outlined the current legal default position, confirmed in a Daily Telegraph article by the Attorney General, Geoffrey Cox.

Parliament has already voted to implement the European Union (Notification of Withdrawal) Act 2017 as well as the European Union (Withdrawal) Act 2018. The combined effect, in conjunction with the extension of Article 50, is that the UK leaves the EU on October 31st 2019, unless of course the already rejected WA is brought into force beforehand.

The default position therefore becomes leaving on 31st October without a deal, unless legsilation can be changed, specifically, repealing the two acts of parliament. Logistics for such a course of action become complicated and time critical.

Parliament is already in recess for the summer, due to return on 3rd September. There are two weeks, for parliamentary business before the scheduled recess for the party conference season. The House of Commons would normally be expected to return on 8th October, giving just four weeks for opponents of Brexit to overthrow Brexit. 

Incidentally, the next European Council meeting is next scheduled for 17th October.

Of course, plans can be scuppered by a general election. Steps have already been taken by the new leader of the Liberal Democrats, Jo Swinson, to call for a vote of no confidence in the new government led by Boris Johnson. The Lib Dems do so from a position of relative strength, having been the second placed party in the recent European Parliament elections following third place in local elections in May.

Convention dictates that the Leader Her Majesty’s Most Loyal Opposition should bring a no confidence motion. There are two significant reasons why Jeremy Corbyn might be reluctant to do so. Firstly, the state of the polls suggests that the timing would be less than ideal for Labour, faced with the resurgence of the Lib Dems in London and the South East whilst in the other regions, the Brexit Party gained momentum. The combined effect was to halve the number of Labour MEPs.

Assuming that the government might be defeated in a vote of no confidence, Labour would also have difficulty in ratifying policy commitments to be included in a manifesto were the party conference not to go ahead.

The Fixed Term Parliament Act 2011 makes provisions for the calling of a general election. In effect, the opposition would be invited to form a new government. Parliamentary arithmetic suggests that a number of Conservatives would have to cross the floor for this to happen, unless an arrangement can be made with the DUP. The latter would be doubtful given Jeremy Corbyn’s associations during the Troubles.

The earliest date an election could be called is now 31st October, the date for withdrawal, unless parliament is recalled during the summer break.

For Boris Johnson to call a general election, there must be support from two thirds of the House, 434 MPs. In any event, Parliament must be dissolved 25 working days before polling. Any extension to the withdrawal date of 31st October would have to be approved both by the UK Parliament and the EU. That translates into electoral suicide for the Conservative Party, possibly for generations.

Against what many will consider to be a complex political background, how do we assess the probabilityof each outcome?

Currently, Boris Johnson may be correct in his assessment that a deal would be likely. If acting in the interests of EU citizens, the EU itself may feel that the trade balance, therefore economic prosperity, means that compromise, at least on the backstop, has to be made.

There is also the possibility that Article 50 could be revoked, thus remaining in the EU. For that to happen, Conservative opponents to “no deal” have to act quickly. Given opposition to the WA in three previous votes, those Conservatives would therefore show their hand as reneging on their manifesto commitments. It goes without saying that they would have to outnumber opposition MPs who insist on honouring the Referendum.

Should the EU continue to insist that the WA can not be changed, the prospect of “no deal” becomes more of a reality. The intriguing question is how that might happen.

Boris Johnson may be right in his assessment, that a deal is more likely. In fact, he has proclaimed that he would go “the extra 1,000 miles” to that end, presumably not to fall down at their door. The possibility of tariffs on EU sales, particularly vehicles which account for £25 billion of activity in Germany alone, would have a devastating effect on an already precarious economy. The same applies to agricultural markets currently protected from global competition.

In order to minimise its losses, the EU may decide to break its own rules, which it does in many instances. According to those rules, negotiation on future arrangements can not take place until Brexit has happened. However, there is nothing to stop both sides signalling the intention or writing to the WTO to signal the start of negotiations on a future free trade agreeement, therefore invoke GATT Article XXIV. That would allow the EU and UK to trade on current terms making it a “no deal yet” Brexit.

It is more than likely that text for such an agreement has already been drafted in both Brussels and London.

That is not to say that a trade deal will come quickly. The EU’s own website lists 98 agreements partly in place, pending or being negotiated, many suspended for as long as eleven years. Article XXIV notionally allows for up to ten years for a trade agreement to be concluded.

It may seem as though it will be a quiet summer but like the duck on a pond, there will undoubtedly be plenty of activity going on underneath the surface. The script writing continues, the drama and screenplays will evolve through autumn. It remains to be seen who will be the fall guys.

The Boris Cabinet

Boris Johnson is now Prime Minister. His Cabinet is not merely reshuffled but well and truly scattered. Has he created a house of cards from a new deck or is he just the Joker?

An immediate observation is that of diversity. Of the four great offices of state, PM, Chancellor, Home and Foreign Secretaries, none can claim to have a paternal father born in the UK. Boris’s own was Turkish, descended from a Circassion slave. Raab’s father was a Czech Jew who came to this country in 1938.

The new Chancellor’s family came to the country from Pakistan in the 1960s, contrasting with Patel whose Indian Gujerati family had resettled in the UK after being expelled from Uganda under Idi Amin’s regime. Boris was the only one to have been born outside the country, in Manhattan.

These appointments on their own send a powerful message of Britain being a land of opportunity, with a global outlook. In his speech outside Number 10, Boris was clear about rekindling free trade opportunities around the world.

Ethnic diversity is apparent through the rest of the Cabinet, with Alok Sharma at Employment, Rishi Sunak in the Treasury, James Cleverley the new party Chair and Kwasi Kwateng in charge of Business, Energy and Industrial Strategy.

Certainly, some women have left the Cabinet, obviously Theresa May, Penny Morduant and Claire Perry. As well as Priti Patel, Liz Truss has been promoted to International Trade with Amber Rudd retaining DWP. Former ministers who had resigned, Andrea Leadsom, Esther McVey, are reinstated. Nicky Morgan and Theresa Villiers, both dispensed with by May, also return.

No doubt much will be made of Jeremy Hunt’s decision to return to the back benches rather than accept an alternative to the Foreign Office. However, it is noted that a number of other announced candidates in the leadership election have stayed or been promoted to the Cabinet; Gove, Cleverley, Javid, Raab, McVey, Hancock and Leadsom.

Notably, the average age of the Cabinet has reduced. At 59, the Attorney General, Geoffrey Cox is now the oldest member, none in their 60s left. He retains the same role, as does the youthful Matt Hancock. The only others to hint at continuity are Rudd, DexEU Secretary, Steve Barclay, Leader of the Lords, Baroness Evans and Welsh Secretary Alan Cairns.

The talking points of Boris’s appointments contract with his predecessor, who notably appointed a cabal from her years at Oxford University. Those included Philip Hammond and Damien Green as well as a raft of other non-Cabinet ministers. Boris’s own potential for accusations of nepotism extends to his younger brother, Jo, outspoken for his policy differences with the new PM whilst the Oxford contingent has noticeably reduced.

If the global message is one of diversity and an outward looking Britain, what of the image closer to home?

Many commentators have already suggested a lurch to the right. In some cases, this might be justified, for example in Patel’s advocacy of capital punishment. Raab is one of the more prolific writers on policy, representative to an extent of the free market wing of the party which also includes the likes of Jacob Rees-Mogg, leader of the ERG, now Leader of the House and a font of procedural knowledge.

The undeniable shift is in Brexit Policy. Boris has surrounded himself with senior Cabinet members from the Leave camp, consistent with his aim of having a united Cabinet, committed to exiting the EU on 31st October 2019.

Boris himself is a former Foreign Secretary, Raab having resigned from DexEU over the Withdrawal Agreement. Barclay provides continuity, Cleverley having been a junior minister in the same department until this week. Certainly, those, like Gove, consistently voted in line with the Ministerial Code, Leadsom and McVey, the “blue collar Conservative” option having belatedly resigned at the final hurdles of May’s treaty.

The structure of the new Cabinet undoubtedly sends a strong message to the EU.

On the other hand, the new Prime Minister will be mindful that whilst Cabinet opposition has been minimised, there has been a shift on the back benches. It is a matter for conjecture how rebellious they will be, however, resignation letters present the image that a “no deal” Brexit will be opposed, despite protestations of loyalty to the new PM.

There are some other threats and opportunities for Boris to consider. Below Cabinet level, there are a hundred or so junior appointments that can be made, non Cabinet ministers and Parliamentary Private Secretaries looking to progress their careers. The full picture will become clear over the next few days.

The new rebel may well prove to be the old guard at Westminster, augmented by a few with ambition, in the vein of Rory Stewart and those already choosing their own margins; Oliver Letwin, Dominic Grieve and so on.

If there is a touch of genius from Boris, it is in having appointed a Cabinet for the future, both short term and long term.

On the whole, the leadership contenders have been embraced, to a large extent, represented the future of the Conservative Party. Those with ambition have been given an opportunity to prove themselves for the longer term. Perhaps more importantly, the new Cabinet is one of relative youth, dynamism and deeply symbolic of opportunity.

The old guard may huddle on the back benches, making their case for elevation to the House of Lords, itself an incentive to demonstrate loyalty. Retaining a position in Westminster, in whichever house that may be, can be key to lucrative second, third and more incomes from directorships and consultancies.

Rebellion would almost inevitably lead to a general election. The EU parliamentary elections heralded the rise of the Brexit Party. Cameron demonstrated how to win a majority, promising a referendum to harness the Eurosceptic vote.

In the meantime, the Remain vote appears to be split between two main parties, Labour and Liberal Democrats, with others that might currently be viewed as “fringe”, the Green Party and Change UK/TIG or whatever they choose to be called this week.

As ever, time will tell. Boris has taken some gambles, calculated by his team if not him. He can certainly claim a diverse team, embracing opportunity and “bursting with ideas” as he said in his maiden PM speech in parliament. Can he restore the credibility that has been lost under May?

Like him or loathe him, Boris has given his party at least half a chance at electoral success, whether that comes in the short, or longer term.