Brexit Update 18th January 2019

By January 30, 2019 Brexit Updates

Top 3 developments  

  • Government forced to rethink Brexit strategy following a devastating Commons defeat.
  • Brexit cross-party negotiations have begun but Labour leadership refuses to join.
  • Cabinet split on future Brexit plan .

UK Update

The Story So Far 

The Prime Minister has faced one of the most volatile periods of her Premiership this week, with a crushing 230 vote defeat to her Withdrawal Agreement on Tuesday, and then went on to win a no-confidence motion tabled by the Opposition leader Jeremy Corbyn the very next day.

The meaningful vote was initially scheduled for 11th December but was postponed due to extensive objections from Parliament over the lack of assurances on the Irish backstop. May was unable to gain notable concessions and delivered an essentially unchanged deal to Parliament this week, leading to an inevitable defeat.

Following the defeat, Theresa May invited the opposition to table a motion of no confidence in the Government and Jeremy Corbyn subsequently confirmed that he would table it for the following day. The leader of the opposition argued that the significant defeat of the Withdrawal Agreement demonstrated that Parliament had no confidence in May and her ability to deliver Brexit. The Government defeated the no confidence motion by 325 to 306 votes. This was in line with expectations, with all Conservative and DUP MPs and one independent supporting the Government. May is expected to present a new plan  to Parliament on Monday.

Cross-Party Negotiations 

The Prime Minister made a speech, following this week’s vote, outside Number 10 in which she invited all opposition leaders to Downing Street to help find a consensus for a Brexit Agreement that could gain a Parliamentary majority.

The leaders of the SNP, Liberal Democrats, Greens and Plaid Cymru have already met with the Prime Minister to discuss possible options. Crucially however, Corbyn has refused to attend any meetings with the Prime Minister until a no-deal Brexit is taken off the table. He has also forbidden any of his frontbenchers from talking to the Prime Minister, and she has instead met with senior backbench Labour MPs such as Hilary Benn and Yvette Cooper, the Chairs of the Exiting the EU and Home Affairs Select Committees respectively. This move might suggest that the Prime Minister is willing to circumvent Corbyn and to directly reach out to Labour moderates who want to respect the result of the referendum and to avoid a potentially chaotic no-deal.

It is not fully clear as to why Corbyn is unwilling to engage with the Prime Minister in talks, especially as he has consistently taken the position that negotiation through dialogue is the best course of action. It is likely that he does not want to upset his base of passionate supporters, who are largely opposed to Brexit happening at all.

What is almost certain however is that the Prime Minister will need Labour votes to pass any sort of Brexit deal through the Commons. The Labour Front Bench’s official position is that they want the UK to remain in a permanent Customs Union with the EU, something that is unpalatable to Brexiteers as it hinders the UK’s ability to sign free trade deals.

Cabinet Split

With Brexit renegotiations back on the table, the Cabinet has split over which ‘plan B’ Government should take before the fast-approaching exit date.

Some members of the Cabinet have indicated that a customs union arrangement might be a viable alternative, thereby siding with the majority of the Labour party. The Justice Secretary David Gauke made it clear on Wednesday that the Government should be ‘flexible’ about the idea of a customs union and warned against ‘boxing ourselves in’ by not listening to other options. Additionally, Amber Rudd has further signalled the possibility of a customs union by stating that “nothing is off the table”.

A PM spokesman quickly shut down this possibility, by stating that other bilateral trade deals will be ‘incompatible’ with membership of a customs union. The Leader of the House, Andrea Leadsom, continued to limit the possibility of such a move by arguing that the cross-party talks would not necessarily lead the Government into ‘soft Brexit’ negotiations.

However, there are almost no clear alternatives that could command a parliamentary majority, and with the Government having to present a ‘plan B’ on Monday and the next Brexit vote scheduled for Tuesday 29th January, the Prime Minister is running out of time.

Other Cabinet ministers believe that May should harden her stance with Brussels and present a non-binding plan B motion on Monday that would enable her to prove to Brussels that there is a workable majority for a deal if they give ground. This is an incredibly risky strategy as Brussels has been less than forthcoming in terms of noteworthy concessions thus far. If May goes down this route, she could find herself with an unchanged and unsupported Withdrawal Agreement, resulting in the UK leaving the EU with a no-deal on 29th March.

No-deal off the table?

A leaked conference call transcript revealed that the Chancellor of the Exchequer, Philip Hammond, told business leaders that the threat of a no-deal Brexit could be taken ‘off the table’, along with Article 50 being revoked.

Following numerous calls from business leaders to delay Brexit and initiate a People’s Vote, Hammond assured leaders that the Government would stop spending money on a no-deal Brexit as soon as they were sure it wasn’t going to happen. Once again this outlines the lack of unity within the Cabinet. Whilst May refuses to remove no-deal from the table, others, such as the Chancellor, are making blanket promises to influential leaders about how no-deal will be removed from option list. Such lack of agreement amongst Cabinet members does not bode well for forthcoming negotiations. It appears that ‘anything is on the table’ and the difference of opinion could swiftly lead to an accidental no-deal.

During the call the Chancellor outlined how a backbench committee bill, proposed by Nick Boles, Sir Oliver Letwin and Nicky Morgan, being proposed to Parliament next week, could be supported by Parliament and therefore would act as a “backstop” against a no-deal Brexit. The Bill in question would take the power of Brexit legislation from the Government and into the hands of the Liaison Committee – the 36 MPs who chair other committees. The Liaison Committee would then be responsible for the forthcoming Brexit negotiations, involving either extending or revoking Article 50 in the event of a no deal. As Hammond suggested on Tuesday’s call with business leaders, this Bill is popular with MPs and could pass.

EU Update 

Extension of Article 50

Given the limited time until the UK’s exit date, some of the EU27 countries, such as Ireland, France and Germany, have suggested that they would be willing to accept an extension of Article 50 in order to ensure that the UK leaves the EU with a pre-agreed deal. However. the EU Commission have not yet taken a definitive position on this issue. It is possible to conclude that the EU would be willing to extend Article 50 in order to accommodate these negotiations, as it would be extremely difficult to change the terms of the Withdrawal Agreement in the limited time before 29th March.

However, if Article 50 is extended, it could coincide with the European Parliament elections which are due in May. This would mean that British MEPs who were originally meant to step down from their positions after the 29 March would temporarily remain in post and would be exempt from the Parliamentary elections. EU officials are also worried that this could mean that UK MEPs would vote for the next European Commission President at the end of May, and then leave weeks after. While this possible outcome is causing some headaches in Brussels, it is clear that EU leaders are open to the prospect of extending Article 50 in order to avoid the inevitable consequences of a no-deal Brexit.

FAQ: What happens next?

What are the chances of a general election before Brexit?

  • A General Election is unlikely to happen unless an early poll is called by the Government or if May loses another vote of no confidence.
  • It is doubtful that May will call an early election due to her resounding commitment to deliver the UK’s exit from the European Union.
  • It is probable that the Opposition will call another vote of no confidence, having until 31st  January to win such a vote and hold an election before 29th March. However, it would require the DUP or Conservative MPs to vote against the Government and whilst both lack support for the current Withdrawal Agreement, their confidence in the Government appears to remain.
  • Additionally, the Liberal Democrats, this week, have publicly stated that they would not support Labour if another vote of no confidence was called.

What are the chances of a second referendum?

  • Calls for a second referendum have risen after May’s dramatic defeat in the Commons earlier this week.
  • The likelihood of this outcome greatly depends on whether Corbyn backs the move, having remained silent on the issue so far.
  • A recent YouGov poll has made it clear that such an option is overwhelmingly popular with Labour members, with around 90 Labour MPs also publicly backing the move. However, the party leadership is concerned that this would damage traditional working-class support, particularly in the north of England.

Is May’s deal dead?

  • As the Agreement currently stands, significant changes must be made for it to be accepted by Parliament.
  • The two most significant barriers to the Withdrawal Agreement are the Irish backstop and the future relationship between the UK and the EU.
  • Reports suggest that EU27 leaders could be prepared to offer concessions such offering legal assurances or setting an end date for the temporary backstop in Northern Ireland, after the loss of the meaningful vote, hoping that this could sway MPs.
  • Additionally, rumours suggest Brussels is prepared to negotiate a different future relationship which could involve a long-term customs union and closer regulatory alignment, subject to the UK’s wishes.

How likely is May to survive as PM?

  • May has so far survived two different no confidence votes – one last month amongst Conservative MPs and one this week within Parliament.
  • It is unlikely that Conservative MPs or the DUP will vote against her if the Opposition calls another no confidence vote.
  • There is no clear front runner within the Conservative Party to replace May at the moment and she has remained committed to delivering Brexit.
  • During the vote of no confidence last month, May gave her party the concession that she would not fight the 2022 General Election.

Can Parliament stop a no-deal? 

  • As it currently stands, Parliament cannot prevent a no-deal Brexit without the backing of Government.
  • A major obstacle to no-deal is that MPs have already begun to deploy numerous parliamentary tactics to obstruct the Government’s ability to leave without a deal.
  • One tactic has been voting through an amendment to the Finance Bill, making it more difficult for the Treasury to implement changes to taxes that relate to the EU.
  • Another tactic by MPs has been to suspend existing standing orders in order to give Parliament control over Brexit legislation instead of the Government.
  • In a leaked call with business leaders, the Chancellor, Philip Hammond told business leaders that a no-deal Brexit could be “taken off the table” with the potential to revoke Article 50.
  • A group of backbench MPs, Nick Boles, Sir Oliver Letwin and Nicky Morgan, have launched a bill which will be voted on in Parliament next week to hand power over Brexit legislation to the Liaison Committee and force the Government to apply for an extension of Article 50 if there is no deal by February, thereby preventing a no deal. There is potential that this will pass through Parliament, with Labour most likely backing the deal to embarrass Government.

Upcoming Key Dates

  • 21st January: May presents ‘plan B’ to Parliament
  • 29th January: Commons will vote on Brexit next steps
  • 29th March 2019: UK planned exit from the European Union
  • 30th March 2019: UK planned transition period.
  • 31st December 2020: UK planned exit from the transition agreement.

 

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