Brexit — A Way Forward

When Teresa May embarked on her walking holiday, the government seemed in a virtually unassailable position with regard to the implementation of Brexit.

The Conservative Party had acted quickly and effectively to address the political turmoil in the aftermath of the referendum by making the most appropriate candidate Prime Minister.

In turn, Teresa May had quickly formed a new cabinet that seemed to provide a sensible balance between Leavers and Remainers.

The Prime Minister’s rhetorical barriers — “Brexit means Brexit” and “no running commentary” — were effective as at least temporary deflections.

Although the £ had lost some value in the immediate aftermath of the vote, financial markets stabilised and the short term economic gloom predicted by the Treasury did not materialise — consumer spending in particular proved robust.

While the EU was understandably concerned about the referendum vote, there seemed to be a growing consensus to make the best of it with some moderate European voices advocating an at least “smooth”, if not necessarily “soft”, Brexit.

In Parliament, while Labour focused on its internal battles, opposition was, to be polite, limited. Parts of the Labour Party seemed at best equivocal about some aspects of EU membership.

If a week is a long time in politics, then the last few months seem like an age.

While the fact of the referendum mandate to leave the EU remains unarguable, almost all the factors that had strengthened the Government’s position have either weakened or become weaknesses.

The Government’s continuous recourse to protecting its negotiating position as a rationale not to answer Brexit questions in detail is now often interpreted as a lack of unity, direction and planning rather than pragmatic manoeuvring.

The Cabinet has seemed at times fractious and divided — not by Brexit itself but by the shape and manner of its implementation. Periodic newspaper leaks of Cabinet discussions have undermined the Government and made a mockery of “no running commentary”.

The impression has been created that the Government is a collection of disparate individuals with markedly different views rather than an executive intent on making a collective success of Brexit.

Parliamentary questioning has become more organised and forensic and has at times coalesced into a cross-party movement — for example, with respect to Parliamentary engagement, the redoubtable Keir Starmer complemented by Anna Soubry, Steven Philips, Nick Clegg and others.

In addition, some concerns have also emerged from a number of prominent Leavers with regard to the Government’s positions on immigration and the rights of EU citizens resident in the UK.

Although the economy has continued to perform reasonably well since the referendum (and much better than expected), the collapse in the value of £ has generated negative commentary and will, without correction, result in a highly visible and painful reduction in living standards.

If the economy weakens, the Government and Bank of England have limited room for manoeuvre. Interest rates are at a historic low and the scale of the budget deficit precludes any material fiscal intervention.

The complexity of Brexit implementation has become ever more apparent as the Government attempts to chart a course between its interpretation of the views of the referendum electorate and the economic consequences of policy alternatives

Meanwhile, recent polling (e.g. YouGov or Ipsos MORI) suggests that the public is becoming more concerned about some of the potential economic consequences of Brexit.

As common sense dictates and polling reflects (e.g. Eric Kauffmann’s post), we can and we should make the assumption that only a minority of the electorate would be even notionally willing to endorse policy decisions that would make them poorer.

In Europe, the EU has displayed a rare degree of unanimity with respect to its hardened opposition to a “soft” Brexit. The much vaunted interests of German car makers (et al) have been subsumed by the EU’s dominant objective (at least for now) to preserve and enhance its political integrity.

Other problems have emerged.

The combination of devolution and regionally disparate referendum voting presents a potentially existential problem for the UK. While the Scottish referendum provided a decisive “remain” vote, Scotland voted even more decisively “remain” in the EU. In “hard” Brexit scenarios, the First Minister may feel that from a democratic perspective she has no choice but to call for another referendum.

In addition, the current court case regarding parliamentary approval for Article 50 notification may, if successful, result in a delay to the Government’ current timetable. The case has also highlighted two other thorny issues — the abrogation of individual rights that would likely result from leaving the EU and the potential revocability of the notification itself.

In summary, the Government is currently failing to convince a majority in Parliament, much of business, the financial markets and many of those those that voted in the referendum that it has a plan to implement Brexit sensibly, thoughtfully and successfully.

As a result, there is a real risk that the Government will find it increasingly difficult to proceed in a rational and effective direction as uncertainty persists, opposition grows and especially if the economy begins to falter.

There is a national imperative to get Brexit right and the Government should implement the following actions, which, taken together, would, I believe result in a judicious and timely “reset” to the current situation.

1. Allow Parliament to debate and vote on the Government’s Brexit objectives and negotiating plan prior to Article 50 notification

A principal reason for the development of Brexit related opposition has been the Government’s refusal to engage substantively with Parliament. Unless there is a material change in this approach, opposition will become more intensive and vociferous.

The “no running commentary” on negotiations defence has been neither convincing nor effective. There seems no good reason why the principal Brexit contours can’t be revealed without this materially impacting the UK’s position. At the same time, it is both appropriate and pragmatic to ensure that key considerations, for example the economic trade-offs for different alternatives, are thoroughly debated in detail.

Ironically, the Government’s failure to engage substantively with Parliament has actually weakened the UK’s negotiating position by providing the basis for the development of cross-party opposition. Conversely, strong Parliamentary support debate would materially strengthen the UK’s position.

The recent announcement of Brexit related debates is a helpful development. However, these debates need to be much more substantive than a discussion of “high level principles”.

The most tangible indication of parliamentary engagement would be a debate and vote prior to Article 50 notification. As, for example, Hilary Benn has commented (Andrew Marr, October 23), the focus should be the UK’s objectives and negotiating position rather than Article 50 notification itself.

2. Change approach to immigration

The Government has stated that while both immigration control and EU market access are key objectives, the former is a priority versus the latter. In addition, the Government has also said that materially reducing the absolute number of immigrants is a key objective.

The Government’s focus on immigration has materially concerned business and has not been helpful for the UK’s relationship with the EU. It has also unsettled the financial markets — the various statements at the Conservative Party Conference regarding immigration and the economy were a principal reason for the fall in value of the £ during and after.

While the short term political benefit of controlling and reducing immigration is clear, this objective should sit alongside rather than in priority to EU market access and the health of the UK economy.

In this regard, I see no reason why a sensibly considered and sensitively expressed immigration policy that enables “control” can’t be conceived and effectively communicated (e.g per William Hague in The Telegraph, 3 Oct 16).

A more balanced and nuanced approach to immigration would stand a much better chance of being compatible with greater EU market access. It would also enable the financial markets to attribute a greater likelihood to the Government’s inclination to negotiate pragmatic solutions to complicated problems and a higher probability to the likelihood of an “intelligent” Brexit. This would have a positive impact on the value of the £, thereby reducing near term pressure on the government.

3. Guarantee the rights of EU citizens resident in the UK

There are both moral and practical reasons to press ahead with guaranteeing the rights of EU citizens resident in the UK. The argument that the UK cannot at present do this because these citizens will be an important factor in future negotiations is not neither helpful nor substantive.

The Government’s position has little, if any, negotiating value. From a practical perspective, it is difficult to envisage a situation where we would not guarantee EU citizens’ rights and conversely where the EU would not guarantee UK citizens’ rights. The outrage caused by any other outcome would thoroughly destabilise the entire negotiation process.

The maintenance of the most co-operative and cordial relationship between the UK and the EU is fundamental to the well-being of both. It is also vital to the success of the Brexit negotiations.

The UK’s guarantee of the rights of EU citizens would be very widely supported and well received in Europe. There’s no reason why a similar statement from Europe with regard to UK citizens could not be announced at the same time.