May’s Brexit policy is coming unstuck: time to prepare for a labour government

7 February 2018

Garvan Walshe

As this article went to press, the BBC devoted a major section of its prime current affairs morning radio show, the Today Programme, to different ideas of how a “Brexit dividend”, extra money that would supposedly be available to the UK after Brexit, should be spent.

This is nonsense (far from a dividend, the British treasury has allocated £60b to deal with its costs). That it is nonsense is no deterrent to the pro-Brexit half of Theresa May’s party who have become worried that she will be forced to concede a ‘Brexit in Name Only’ by Remainers, led by the Chancellor and Home Secretary and supported by increasingly assertive backbench rebels.

This internal party battle is her first, and most immediate, headache. Brexiters had three main aims: to end the jurisdiction of the European Court of Justice, abandon the free movement of people, and allow Britain to pursue an independent trade policy.

The first has been fudged: even the veteran Eurosceptic Sir William Cash has deemed the EFTA Court, a system of dispute resolution that Norway and Iceland use, acceptable. But ending free movement is thought politically necessary, because the referendum was fought on reducing immigration. Most Tory Remainers have reconciled themselves to the fact that this means leaving the Single Market. But they still hope that the UK will be able to at least stay in the Customs Union.

That however would make an independent trade policy impossible: that is after all the point of a customs union. The UK would have to simply accept the EU’s external trade policy. To Brexiters, who (mistakenly) believe that the UK can quickly conclude better trade deals outside the EU, this is a big loss. A Brexit without the freedom to have an independent trade policy is, to them, not much of a Brexit at all. May’s policy, which is to hope the UK can avoid the economic disruption entailed by Brexit while simultaneously “diverging” from EU rules, is nothing more than the suspension of disbelief. Such a “bespoke” deal is not available, despite self-deception on this island. The reaction of Macron’s press conference with Theresa May is instructive. Here it was reported as holding out hope of a “special deal”, but the view in France was quite different. Yes, Britain could stay in, but only if it obeyed the rules. Getting the benefits of staying in, without obeying the rules, isn’t on offer.

This will cause her second headache. Though the EU and the UK both signed up to a document that allowed the negotiations to move forward in December, they disagree about its meaning.

The disagreement centres around “regulatory alignment”. In short, the EU27 believe that the UK has agreed to allow Northern Ireland to determine whether Great Britain can diverge from the Single Market and Customs Union. The UK believes it only agreed to maintain alignment in six narrowly defined areas of policy.

The problem here is that May’s government depends on the Democratic Unionist Party, who don’t want a border between Northern Ireland and the island of Britain. But, leaving the Customs Union entails, as an absolute requirement, the creation of such a border, and any agreement with the EU, requires there to be no border between Northern Ireland and the Republic. “No deal”, would not only be an economic disaster, but is unacceptable to half of her cabinet and about a third of her parliamentary party.

This leaves her with a third, Scottish, headache. May could override the Democratic Unionist Party, and agree that Great Britain should leave the Single Market and Customs Union, but allow Northern Ireland to stay in, and so avoid a border with the Republic of Ireland. This would give Northern Ireland an advantageous status: in the political union of UK, but also in the economic parts of the EU. Even if the DUP did not consider this betrayal, and bring the government down, this is such a good deal that Scotland, which voted Remain by more than Northern Ireland did, would want it too.

The final alternative is to betray the Brexiters, and agree to stay in the Customs Union. This would reduce (but not eliminate) the difficulties caused by Northern Ireland, and limit some of the economic damage from Brexit. But, it would cause an impossible political crisis not just in May’s party, but also in England as a whole. England voted to Leave by seven points, and would see a “soft brexit” as no Brexit at all. The fourth, and biggest headache is therefore English.

A year ago May created a Brexit policy that depended on her absolute control of domestic politics. But her defeat this June forced her to make incompatible promises to the DUP, both wings of her own party, and the EU. She secured the party leadership as the unifying candidate. She’ll now have to choose sides, but without enough strength to tilt the balance in favour of the side she picks. The days of Conservative government are numbered, and Jeremy Corbyn’s far-left Labour party is ready to take over.

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