No End In Sight To Brexit Battles

NO END IN SIGHT TO BREXIT BATTLES 14th June 2018

Pawel Swidlicki Senior Account Manager

KEY TAKEAWAYS After a marathon two-day session, the EU Withdrawal Bill has once again cleared the Commons. The Government prevailed on every vote, although a key concession preventing defeat over Parliament having greater control over Brexit - threatened to unravel almost immediately, and plunged the Conservatives into a renewed bout of infighting. The voting also revealed Labour’s internal divisions on Brexit. Below are our key takeaways:

Mrs May is running out of room for manoeuvre and Parliament could ‘take back control’ The Government agreed to hold further discussions over Parliament’s role in the Brexit process. Why? Because rebel Tory MPs were on the cusp passing an amendment that that would have seen an unprecedented curtailment of Executive powers. In short it would have given MPs a veto over any exit deal AND the power to instruct Government to pursue a particular course of action in the talks that followed. Parliament, rather than Government, would effectively have ‘taken back control.’ However, it subsequently emerged that the Government and the rebels had different interpretations of what had been agreed to. What followed was a concerted pushback from Brexiteer ministers and MPs, who insisted it would be completely unacceptable to give Parliament any kind of veto over the negotiations. The Government then appeared to row back on which parts of the amendment were up for negotiation. 14 June 2018

Calum O’Byrne Mulligan Senior Account Executive

Predictably, blue-on-blue clashes broke out everywhere in the Commons, on the airwaves and on social media. If the new attempt at compromise fails to achieve the very tricky balancing act of satisfying Brexiteers AND rebels, the latter may conclude that they have been misled. Cue potential House of Cards moment. First the retabling of the amendment when the Bill returns to the Lords. Then an explosive Commons showdown in which the rebels might just have the numbers to defeat the PM. The result almost certainly would be an end to the what Brexiteers see as the PM’s trump card – a credible threat to ‘walk away’ and pursue ‘a no deal Brexit’. Anger from Pro-Brexit MPs and media impatient with the PM’s handling of Brexit would turn to fury. And finally, just possibly, a challenge to her leadership could follow. Hypothetical, yes, but it just might happen. This is why this compromise matters so much. EEA membership looks dead but Labour’s own Brexit divisions have been exposed A more welcome development from the perspective of the Government and the Brexiteers was the vote to reject membership of the European Economic Area (EEA) by 327 votes to 126. Such a comprehensive defeat will be hard to come back from and it has effectively brought an end to the so-called Norway option of staying in the single market.

MPs who favour a softer version of Brexit will now likely try to pursue a more bespoke model - close association with the single market and a new UK-EU customs union. Labour remain torn between their predominantly proRemain members and voters, and holding their many Leave-voting seats in the Midlands and the North. The party’s official position was to abstain on the EEA, but in total 90 of the party’s 257 MPs rebelled. This represents a huge rebellion – the biggest since the Iraq War - and a big challenge to the authority of Jeremy Corbyn, who is again beginning to face murmurings about his leadership. Labour’s position will become hugely relevant if the Commons does indeed become pivotal to delivering the Brexit process. Rebel Labour votes when combined with rebel Tory votes could yet prove crucial in shaping Brexit. Customs Union set to be the next battleground In the run-up to the Bill’s return to the Commons, it was widely expected that the Lords’ pro-customs union amendment would be a key flashpoint. However, both sides of the Tory party agreed a pre-emptive ceasefire by cosigning an amendment which deferred the Government’s decision over the new UK-EU customs arrangement until the end of October. The matter is still likely to come to a head when both the trade and customs bills return to the Commons next month. The result is too close to call at this stage but unlike the EEA, which entails continued free movement of people, the customs union is a less politically sensitive issue for MPs in Leave seats. All this drama has little bearing on the EU’s negotiating position Westminster drama and intra-party conflicts are always engrossing, but it is important not to lose sight of the bigger picture. Ultimately, UK domestic politics will have little impact either way on the EU’s fundamental negotiating principles, which have remained remarkably consistent throughout.

In addition, the Government’s failure to adequately prepare for no deal has probably removed it as a credible negotiating threat in the eyes of the EU. There is still a chance that no deal could happen, but it would in all likelihood be an accidental no deal rather than a deliberate strategic choice.

NEXT STEPS Friday 15 June: Government to publish its compromise version of meaningful vote amendment Monday 18 June: Withdrawal Bill returns to Lords Week of 25 June: Commons expected to reconsider Withdrawal Bill 28 - 29 June: European Council summit Early July: UK Cabinet to convene at Chequers to sign off on Brexit White Paper setting out UK more detailed proposals for new UK-EU relationship Mid July: Customs and Trade Bills back expected back in the Commons with likely showdown over new UK-EU customs union 24 July – 3 September: Parliamentary recess 22 - 26 September: Labour Party Conference 30 September - 3 October: Conservative Party Conference 18 - 19 October: European Council Summit at which both sides hope to conclude Withdrawal Agreement Late October: House of Commons set for crunch vote on Withdrawal Agreement

13-14 December: European Council summit - possibly the last chance for UK and EU to conclude Withdrawal Agreement if not done in October

The negotiations are deadlocked because of the difficulty in squaring off the UK’s three key objectives - leaving the single market and customs union, avoiding a hard border between Ireland and Northern Ireland, and avoiding any new barriers between Northern Ireland and the rest of the UK. The UK has rejected the EU’s proposed fall-back option of special status for Northern Ireland. The EU has rejected the UK’s proposal for a UK-wide backstop. This is ultimately the issue that needs to be resolved. Events in Westminster, while important in establishing what happens if agreement can’t be reached, don’t do anything to bring agreement with the EU closer.

14 June 2018

REACTIONS “Not only will we have to stay in a form of customs arrangement amounting to a union, but we're also going to have to have a high level of regulatory alignment because otherwise the life that takes place along the border will be impossible.” Rebel Tory MP Dominic Grieve

“We’ve agreed to further discussions... I am concerned that if we go too far down the road and start creating a mechanism by which the government is mandated or directed to follow the instruction of parliament we’re in rocky constitutional territory.” Solicitor General Robert Buckland.

Underlying all this concessions confusion is the fact that trust “The damaging amendment away badly, on both in the centre has ebbed wings of the “The Labour Party respects the made by Conservative outcome of the EU referendum Remainer Dominic Grieve on Parliamentary Conservative Party. and does not support the EEA or Tuesday contained within it the ability for Parliament to block Brexit perpetually.” Former Conservative Party leader Iain Duncan Smith

Majority of Labour backbenchers voted for Lords’ Amendment on EEA tonight. View of Lab MPs is clear, we don’t want a hard Brexit.

Underlying all this concessions confusion is the fact that trust in the centre has ebbed away badly, on both wings of the Parliamentary Conservative Party.

14 June 2018

Norway model as it is not the right option for Britain.”

Labour leader Jeremy Corbyn

We've not, and will not, agree to the Commons binding the Government's hands in the negotiations.

For the avoidance of doubt the PM said yesterday that clause c of Dominic Grieves amendment would be discussed as part of the new amendment to be tabled in the Lords. If the PM goes back on that there will be no agreed amendment that I can support #sortitplease

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