30 Jan 2019

To The Wire. There are now only two realistic routes to the UK leaving the European Union

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Even by the Alice in Wonderland standards of Westminster, the past 48 hours or so have been exceptionally curious. The Government ‘won’ a vote last night that was deemed politically crucial, even though the measure concerned involved a motion of no legal standing whatsoever.

It did so, furthermore, by performing less of a U-turn than a back-flip, accepting an amendment from one of its own senior backbench MPs, Sir Graham Brady, Chairman of the 1922 Committee, which called for ‘alternative arrangements’ to be found instead of the current Irish border backstop, an alternative which until the weekend ministers, and especially Theresa May herself, had insisted that the EU would never accept.

Even this act of retreat was not enough, it had to be reinforced by the Prime Minister switching from closing the debate yesterday to opening it, so that she could state publicly that she intended to ‘re-open negotiations’ with the EU-27, once again an approach which until very recently she had denounced as extremely unrealistic. Her public retraction of that stance occurred so that the more committed members of the European Research Group of Conservative MPs would embrace the Brady Amendment, which otherwise they would have deemed too ambiguous to back.

So, the Prime Minister now finds herself destined to engage in what one suspects will be quite a challenging set of conversations with EU leaders. The one asset she has is that the vote for the Brady amendment means she can claim there is a route to a majority in the House of Commons for a version of the Withdrawal Agreement provided that the toxic backstop matter is neutralised. Added to this, she will doubtless insist privately, the EU might not have to move much in order to ensure that an orderly Brexit occurs on the scheduled timetable. What she needs is something that has a legal authority to it in order to proceed to a second meaningful vote and to a victory. It is, though, a matter of considerable contention as to whether the EU will shift its position on this at all.

Why did the Prime Minister change her stance so dramatically? The answer is that it was a political imperative for Downing Street to deny the amendment moved by Yvette Cooper and others a win. This would have obliged Mrs May to accept an extension of Article 50 if she had not succeeded in enacting her Withdrawal Agreement by 26 February.

Not only would this have represented a very substantial shift in policy which it would have been difficult for the Prime Minister personally to have overseen, but it would have marked a serious constitutional shift in power between the executive and the legislature. Yet Mrs May was well aware that there were enough Conservative MPs who are absolutely opposed to ‘No Deal’ for the Cooper Amendment to be viable. These include a sizeable number of ministers, including up to six Cabinet ministers, who might have been willing to resign if forced to oppose the anti-No Deal Cooper Amendment with no prospect of an actual deal in sight.

Mrs May thus resorted to her old friend, playing for time. She promised colleagues that if they stuck with her and voted for the Brady Amendment, but not the Cooper Amendment, that she would bring back a revised version of the Withdrawal Agreement for parliamentary approval within two weeks. If that could not pass, then she would make another statement on her next move and put down another neutral motion on 13 February, with another set of votes to be taken the next day.

At that point, they would have the opportunity, if they insisted, to endorse the Cooper Amendment or something similar. As a down-payment on this internal understanding, ministers did not really try that hard to mobilise against the more declaratory and symbolic anti-No Deal amendment that had been moved by Caroline Spelman and Jack Dromey, and which passed the House last night by eight votes.

This complex and convoluted series of moves meant that no one within the Government felt obliged to resign to support the Cooper Amendment, which fell short of the number it needed to prevail (although what sunk it was that 14 Labour MPs bucked the party line to oppose it). Almost all Conservative MPs – Remainers and Leavers – rallied round the Brady Amendment instead.

What next?

Mrs May’s triumph might prove to be gruesomely temporary if her attempt to re-open negotiations ends in abject failure. She is betting the store that the EU will come up with something that blurs the distinction between the (legally binding) Withdrawal Agreement and the (politically constructed) Future Framework Agreement in a manner sufficient to allow the DUP to claim it has carried the day and come back on side, bringing the European Research Group with it. Another means to the same end would be if the EU were willing to tolerate an additional option for the UK come June 2020 if it is obvious that a new free trade agreement with the EU will not be concluded by the end of that year.

In all of this Mrs May has reason to hope that she holds the joker in the pack. It is that the ERG set of Conservative MPs really do not want Brexit to be delayed. They fear that if Article 50 is extended once then it could be extended again and do not want to offer up time in which those who favour a second referendum, who have been routed in Parliament of late, might be able to stage a comeback.

Enter the ‘Malthouse Compromise’?

That concern explains the emergence earlier this week of senior figures from both the Remain and Leave camps among Conservative MPs engaging in a direct dialogue to secure a solution. This so-called ‘Malthouse Compromise’ (named after Kit Malthouse MP, the Housing Minister, who favoured Remain at the referendum but who spent more of Boris Johnson’s second term as Mayor of London running City Hall for him) might prove a false dawn but could be a crucial innovation.

The essence of the blueprint is that the backstop could be swerved if the UK opted in mid-2020 to take an extension of the transition period all the way until 31 December 2021 to acquire the time to negotiate the ‘end state’ free trade agreement with the EU-27 and failing that, if such a bargain was not available, move towards WTO rules then in a measured manner and not a car-crash cliff edge.

This might look like a compromise in which the Remain lobby led by the likes of Nicky Morgan has conceded more territory than the ultra-Leave contingent such as Jacob Rees-Mogg. After all, Ms Morgan is supposed to be opposed to any kind of Hard Brexit in any circumstances. Appearances in this instance can be deceptive. It is the Leave fraternity that has surrendered the most in principle, swallowing the €39 billion bill that until this point it has insisted should not have been offered without a final settlement. It is also almost certainly true that if by late 2021 the UK and the EU were close but not yet at a long-term understanding, it is far more likely that the transition period would be extended yet again rather than the UK abandoning the effort outright.

Whether the Malthouse compromise or something akin to it emerges as Mrs May’s Plan B would depend almost entirely on the extent to which Dublin would swallow it. If an accord could be found then it is entirely conceivable that a Withdrawal Agreement with Malthouse included could pass.

Only two real choices left then

Although it might not be obvious right now there are only two real choices left on the table. The UK will either leave the EU on the basis of a reformed version of the Withdrawal Agreement as it stands (which might or might not include the Malthouse compromise) or Mrs May will not have found an answer which both the EU and the DUP/pro-Brexit Conservative MPs will tolerate.

If that is the state of affairs come 14 February, when MPs will again be offered the chance to debate amendments in the House of Commons, then the Cooper Amendment (or something very close to it) will return and this time, with much enhanced Conservative support, it will prevail, triggering an Article 50 extension. By the evening of that date, therefore, there should be some light at the end of the Brexit tunnel. Such a result would be an unconventional Valentine’s Day gift. Yet better than chocolate or flowers.

Tim Hames
Director General, BVCA


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