Henry Newman is Director of Open Europe.
For all the many problems of the Conservative Party Conference, ministers and the wider party are actually largely united over the Government’s Brexit plan. The vision set out at Lancaster House still stands: the UK will ultimately leave the Single Market and the Customs Union. At Florence, the policy was further developed to include a transition period of around two years. Here, there is some disagreement: Boris Johnson is insisting that it cannot last “a second more” than two years; Philip Hammond prefers a longer period. Yet neither is challenging the overall policy. These disagreements, and others, over the current stated policy are relatively slight.
There’s much less clarity or agreement around the next phase of Brexit – what happens after the transition. With the Prime Minister’s authority now hanging by a threat, there’s even less clarity about when or how this will be resolved. In the Times earlier this week, Sam Coates suggested that a showdown in Cabinet on the question of Britain’s future relationship is coming soon. He also raised the possibility of ministers resigning over the direction of Brexit if they do not get their way.
One of the areas of conflict is future payments for the EU – separate from any ‘Brexit bill’. The Foreign Secretary has insisted that the UK should not pay for access to the Single Market after the end of the transition. The Chancellor and others are apparently more open to such an option. This may be less of an issue than it appears. If Johnson is happy with the Florence position, which offered long-term payment for participation in cultural, scientific and education programmes, as well as some involvement in EU-level aid to the developing world, then the question of paying for single market access can easily be fudged. One of the EU27 ambassadors I spoke to over the last few days agreed, seeing this as largely a question of “semantics”.
But the bigger question is one about which I have previously written for this site. It’s the struggle within Whitehall between those advocating a relationship based around the Canada-EU trade deal – the so-called ‘CETA plus’ option – and those who prefer to be far closer to a Norway-style arrangement, almost within the Single Market and European Economic Area, in an ‘EEA minus’ model. This fundamental question was dodged in the Florence speech. Theresa May struck what Open Europe concluded was a ‘grown up consensus’ by getting her Cabinet to agree to what she calls an ‘implementation period’. But the decision on our future status was largely deferred.
In her Florence speech, the Prime Minister ruled out straw men, insisting that the UK would neither be like Canada nor like Norway. She said the UK would have a different relationship with the EU from any of the existing off the shelf models. But ruling out a relationship like Canada’s is not ruling out a deeper CETA plus option. Saying we will be out of the Single Market and not in the EEA is not ruling out an EEA minus arrangement.
A key difference between the two options is the extent to which the UK can diverge from the EU in regulatory terms. Under CETA plus, the UK would have the freedom to follow EU rules in some sectors, but not others. In an EEA minus model, the UK would effectively be in a regulatory ERM. New directives, rules and regulations would be ‘faxed’ over to Whitehall and we would have to implement them. It would mean regulation without representation, for the UK would have lost its MEPs, Commissioner and seat around the Council table. The UK must reject the option of being a rule taker for anything other than a short transitional period. The Prime Minister did suggest in Florence that there would be areas where the UK could diverge from the EU in regulatory terms. But the key question is not whether we can diverge, but whether we can diverge without asking the EU first and obtaining their prior agreement.
Since the election produced a hung parliament, power has flowed away from the Prime Minister to her Cabinet. The Treasury acted quickest to push Philip Hammond forward, and to regain the status which that department had lost over the previous year. It took other departments and cabinet ministers a little longer to realise their own strength. Over the last few weeks, the Foreign Secretary and Brexit Secretary have found their mojos, with Boris Johnson publishing his long article setting out his vision for an optimistic Brexit, and David Davis forcing from his department a top civil servant, Olly Robbins. The command and control Downing Street of May’s former joint chiefs of staff had already been replaced by an odd power balance between leave and remain, which saw neither side ahead. What will the cluster of disasters at conference do to this ministerial stalemate? Little for now perhaps – until something happens to shift the balance of power.
On Sunday evening in a hotel suite in Manchester, the Prime Minister took the stage at the ConservativeHome Conference party. Responding to comments by one of the evening’s sponsors, City UK, Theresa May said that we will “already know” our future relationship with the EU by the time we go into the transition. That seems far from certain, not least as her colleagues are forced to line up and offer her their ‘full support’. With a question mark hanging over Downing Street, the Government’s next few moves will be crucial.