15 Nov 2017

Ghosts of Wilson. The next Cabinet compromise on Brexit seems clear. The one after that is not

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Harold Wilson is a forgotten figure in British politics. This is strange in many respects as he won four of the five general elections that he fought and served as Prime Minister for almost eight years, a tally which until Margaret Thatcher and then Tony Blair came along appeared very impressive. Yet a knowledge of Mr Wilson and his political management techniques is unusually instructive at present.

Between 1974 to 1976, the then Labour leader found himself in what might be described as a reverse Brexit situation. He was at the helm in unexpected circumstances, in his case heading what was at first a minority administration and then later one with a virtually nominal majority after a snap election in February 1974 that almost everyone (probably including himself) had expected that he would lose and by a very substantial margin.

Mr Wilson had to preside over a party that was exceptionally divided over the issue of the UK’s membership of the then European Economic Community. It was his fate to start with a detailed negotiation with the EEC (much of which was about money) that would end with a referendum. Theresa May, of course, faces the opposite situation.

The point of similarity, and it is a crucial one, is that the Wilson Cabinet was divided three ways on the matter. There was a faction which passionately wanted to remain in Europe (headed by the Home Secretary and former Chancellor Roy Jenkins). There was a similar sized camp which was equally committed to leaving the EEC (championed by Michael Foot, the Employment Secretary, and Tony Benn, then Industry Secretary). Between the two true believer lobbies sat a rather motley collection of ‘Reluctant Remainers’, career politicians who did not really care that much one way or the other about the subject but whom, on balance, thought that as Parliament had committed the UK to entry to the EEC, that was the heart of the political reality which they faced and hence if the terms could be amended to look somewhat better they would rather stay in the EEC than face the hassle of leaving.

Mrs May faces an almost identical dilemma. She is in political circumstances that she had not planned for even six months ago. Her parliamentary situation is robust in that (like Mr Wilson) she is most unlikely to be defeated in a vote of confidence but also fragile in that she is vulnerable on any vote in the House of Commons that falls short of that ‘nuclear’ option. Her Cabinet is split much as the Wilson one was in 1974, with one lobby led by the Chancellor determined to keep the UK as close to the EU as possible, and another, symbolised if not controlled by the Foreign Secretary, who are as dedicated to the cause of fully separating the UK and the EU. In the middle is an ad hoc set of those who in the referendum campaign were labelled ‘Reluctant Remainers’ but who have since swapped sides and feel obliged to implement the will of the majority on 23 June 2016, but who are basically pragmatic about what the terms of departure are provided their party does not implode over them.

Mr Wilson turned this swamp of a situation to his advantage by positioning himself as the de facto leader of the middle faction in his Cabinet and then rendering himself indispensable as the man in the middle who could arbitrate and negotiate between others with stronger convictions about the EEC than he himself had. He managed to split the difference in such a fashion that while what he came up with in terms of the conditions for staying truly satisfied nobody, then were tolerable to a large enough majority of his colleagues for them to hold together. He secured a relatively smooth route to the 1975 referendum and Labour did not split despite a third of the Cabinet, about half of the Parliamentary Labour Party, a majority of the National Executive Committee and an even larger majority of Labour Party activists actually opposing the Government’s recommendation that the UK stay in the EEC. Barely nine months after his 1975 triumph, Wilson retired of his own accord.

Florence II – the next Cabinet compromise on Brexit

The best-case scenario for Mrs May now – in the light of the election debacle in June – is to seek to effect her own version of the strategy that Mr Wilson implemented between 1974 and 1976. In this instance it means holding the Conservative Party together through terms for leaving the EU in 2019 that are at least bearable to the vast majority of MPs and then once that has been achieved and the UK has moved fairly seamlessly in to a transition period for her to stand down with dignity.

The first stage in that process was her Florence speech in September. The formula she set out there was a Wilsonian balancing act. She offered the Remain camp what it wanted in that she expressed a willingness to pay for a smooth exit and an implementation/transition period. She kept the Leave fraternity content by opting for a transition period of ‘about two years’, close to the shortest of the possibilities that had been suggested. No one at Cabinet level felt so aggrieved that they would quit.

She is about to have to repeat the exercise if she wants the next EU Council meeting in December to agree that ‘sufficient progress’ has been made to allow for talks on both the long-term relationship and the details of the transition arrangement (not that these are extensive) to start in earnest. This is now an absolute imperative. A very slight delay to January would not be a disaster but deadlock in December would make the ‘no deal’ possibility with the UK moving to WTO rules in March 2019 a more plausible scenario and much of the business community would run to the hills at that prospect.

So Florence II will have to involve filling in the detail that Florence I (deliberately) did not choose to do. The Prime Minister will have to offer the EU-27 much more flesh on the bone in terms of what the financial formula will be for the exit. Although this will not involve a definitive final figure at this stage, the formula offered will be sufficiently meaningful that ballpark figures can be calculated. As this is likely to fall in the 40 billion to 50 billion euro range, the Leave lobby will not be best pleased. To appease them, therefore, a firmer pledge on exactly when the transition period will end (such as 30 June 2021) will be needed alongside the recent promise to put in law the exact time that the UK leaves the EU in March 2019. This combination should be sufficient for the whole Cabinet to back it. If she cannot deliver this (and the chances are that she can) then Mrs May is destined to fall shortly.

The fundamental question is whether there is a Florence III out there

A deal of the sort outlined above buys the Government time but is not the basis of a settlement. The fundamental question that follows is what model the future relationship follows after the transition. Is it to be ‘Switzada’ (quite close to the EU) or ‘Canland’ (somewhat more distant)? For Mrs May to be politically relevant to that debate (and hence for there to be any purpose in her being in office), she has to spend early 2018 convincing her Cabinet, MPs and wider party that (a) there is some kind of middle position between Switzada and Canland, (b) it would be desirable for the Conservatives to aspire to reach that middle position and (c) that she is uniquely placed to be the person whom, like Harold Wilson before her, enables the Conservative Party to find that middle position and should not only stay on in Downing Street but be afforded the authority to undertake that internal negotiation.

If the Conservatives decide the answer to any of (a), (b) or (c) is ‘no’ then she will probably not be Prime Minister this time next year. It would be more logical for the choice between Switzada and Canland to be made via a Conservative Party leadership election (albeit that this would be a ballot in which 318 or so MPs and at most 120,000 party members, or 0.25% of all voters, would be decisive). Mr Wilson’s sense of survival turned out to be his salvation. Does Mrs May have the same qualities?

Tim Hames
Director General, BVCA


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