The nature of the EU deal is effectively set

This week, the Cabinet will meet to discuss the options for the March 2019 Brexit deal. In truth, the internal Conservative party debate is secondary to the realpolitik. Given any deal is meant to be broadly agreed by October this year, the outlines are already discernible from the December deal.

  • UK regulatory alignment with the European Union. There may be some flexibility – for example, the UK may interpret (some) regulations as directives, (a directive sets out objectives, but gives freedom as to how these are achieved; a Regulation sets out the means as well). But there will not be the freewheeling regulatory arrangement some Brexiteers yearn for – and given the Northern Ireland border issue, there cannot be.
  • The UK will be in a close customs arrangement but not a formal customs union. This will allow the UK to make trade deals with other countries. Crucially, regulatory alignment allows the UK to easily export goods and services produced domestically to the EU. The UK will have to be responsible for monitoring goods flowing from third countries into the EU – but it must do so already. This will minimise the issues around the Irish border (though a healthy fudge will also be required).
  • There will be freedom of movement restrictions (for family, job seekers or students), but limited restrictions on freedom of labour, (so if you have a job already arranged you will still be able to come to the UK). If Theresa May pays for it, she may be able to create a situation where low income worker flows are also restricted.
  • The UK will make ongoing payments for this arrangement. The more May wants to amend freedom of movement, the greater the payments – because the poorer EU nations are most affected by freedom of movement changes and such payments.

This will build on what was agreed in December, and satisfies each group’s minimum needs. The EU needs access to the Single Market being reliant on largely following its rules. Ireland needs an offer that keeps the border issue under control. The EU27 want UK cash. Eastern Europe wants a deal to retain UK military goodwill. Member states want the UK to not gain so much that domestic pressure builds to exit, while not losing so much that the Commission gains control over member states. The UK needs the ability to make trade deals, show some movement on regulation and freedom of movement, and show that it has escaped ‘ever closer union’.

With this deal, the UK is not quite a ‘rule taker’ but neither is it fundamentally free. Such a deal gives just enough to all parties without being a slam dunk for anyone. It is still possible that one side or another will cock this settlement up by overplaying its hand, but something like above is the only option that might sufficiently satisfy all parties.

A radical Brexit would require a revolution there is not now time for

It is fair to call this a ‘softish’ Brexit with May-style immigration controls. But while Brexit could have gone differently, time has run out. The alternative, a WTO terms Brexit, with no payments, no free trade deal and the UK keeping trade barriers unilaterally low, complete regulatory freedom, and strict border control was a feasible option. But such an option would have required massive changes to how the UK operates.

For instance, the civil service would need to be fundamentally rewired and directed. The Treasury is indeed wedded to the status quo. It looks at a world where (potentially) not growing trade to 40 per cent of our partners and instead growing it with 60 per cent produces a world where we will be 5-8 per cent worse off in 15 years. Further, it clearly thinks there are no gains to be made from flexibility in setting our own laws and regulations. It is ludicrous to make such assumptions.

But amidst the current chaos, the civil service has had to make assumptions. Civil servants are neither impartial nor neutral, but neither are they anti-democratic. Push them strongly, and they will move (even if dragging their heels) where directed. In the absence of an alternate clear plan, Jeremy Heywood and Theresa May are having to deliver the Brexit they can, with the assumptions and biases they have, and it is unfair to attack them for that.

Changing the civil service and moving it away from the current corporatist and sluggish beast is just a tiny example of what would be needed to make the radical WTO Brexit option work. The UK would need to improve infrastructure, simplify taxation, reform public services, change planning, reconsider monetary policy and more.

There were elements of such radicalism in the vague discussions between Michael Gove and Boris Johnson at the time of the EU referendum, and even more in freewheeling thinking of Dominic Cummings. But Theresa May was the person who emerged triumphant in 2016 and who has, despite sometimes poor judgement, and an awful election campaign including a dire manifesto, driven through a difficult negotiation. She deserves serious credit for it – and she still outscores Jeremy Corbyn on ‘best Prime Minister’ because the public do give her credit for it.

If others wanted a different outcome, they should have removed her before now. She has gained the right to shape the deal we obtain in 2019 – and more importantly, it is too late to think otherwise. In any case, there is no sign the revolution needed would necessarily emerge in what would have to be just six months, given the time needed to run a bruising leadership election. In Michael Gove’s DEFRA, it seems that Brexit means more, not fewer, regulations (and presumably more expensive food). Boris Johnson’s Foreign Office has not pioneered a radical new approach to the world. They have solidly delivered in their Departments, but it is hard to see a radical approach that could be replicated across Government to enable the WTO option to succeed.

Longer term, establishment Tories are less likely to beat Corbyn than radical Tories

To ditch May now would be a disaster because, given the fight that would follow, we would not have the time to prepare for a ‘no-deal’ scenario. Yet longer term, the radical option is not dead. The original emerging Gove and Johnson thesis was that Brexit showed the country needs a revolution to renew itself. This is also the belief of Jeremy Corbyn, and it took him to 40 per cent in the polls as the Tories ran a dreary establishment campaign.

While May must stay for now, it is also true she must stand down in 2019: the Tories cannot renew with her as Prime Minister. Once Brexit is finalised the Party, will have to decide how best to take on Corbyn. The Conservatives will have to decide if they want to run as the party of the establishment or radical renewal. I would argue regardless of the outcome of Brexit, the second choice is the more likely path to victory in the face of the Corbyn insurgency.