Brexit – the Political Implications: a Post-Conservative Party Conference View by Lord David Hunt, Partner – DAC Beachcroft
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Brexit – The Political Implications: A Post-Conservative Party Conference View by Lord David Hunt, Partner – DAC Beachcroft We have seen a significant hardening of the Prime Minister's position on Brexit, with her speech at the Conservative Party Conference in early October. Inevitably, the entire conference took place under the shadow of Brexit and we now know the Prime Minister intends to make the UK's withdrawal application under Article 50 by the end of March 2017. She supported the Remain campaign before the referendum, but she sounds increasingly like a genuine convert to the Leave cause, inclining towards "Hard Brexit" – leaving not only the political aspects of the EU, but also the Single Market. This is principally an acknowledgement of political reality, but already a significant number of Conservative MPs have indicated their strong support for remaining within the Single Market. Under the arrangements that currently prevail, that would of course require the continuation of free movement of citizens, as well as of goods, services and capital. The Prime Minister's “honeymoon” is not yet over, but there will have to be much coalition building within Parliament. Immediately upon her appointment, Theresa May took steps to give the country some breathing space. This resulted in the President of the European Commission, Jean-Claude Juncker, talking of building a new partnership with the UK, of our shared common interests and of friendship rather than categorical and immediate action. She also charged ministers with evolving a clear approach to Brexit and clarifying exactly what we are asking other countries to agree. The Conservative Party conference in Birmingham was very significant indeed. It provided the first opportunity for new cabinet ministers to present themselves to the party rank and file and also to demonstrate the areas of policy in which the new government will either provide continuity with what went before, or move in a new direction. The Role of Parliament On 13 September the House of Lords Constitution Committee published its report on the Invoking of Article 50 – the formal application to withdraw the United Kingdom from the European Union. The principal conclusion was that: "The referendum result was clear. It will be the Government's task to determine how the will of the people, expressed in binary terms in the referendum, should be implemented, and where among the range of potential outcomes the final settlement by which the UK leaves the EU will be made. " The United Kingdom has been a member of the European Union – in its various guises – since 1973 – and this is reflected in much of the legislation that has been enacted since then. All of that will have to be disentangled; and this consequential activity will be extremely intricate and time consuming for Parliament. It is a potenti al minefield, without precedent. The feeling amongst Remainers on the morning of Friday 24 June was a mixture of shock, disb elief and anger. The recriminations began almost straight away and all the stages of grief, including denial, have featured strongly in the intervening months. Since then, the pro-EU elements in political life have been in disarray. On 12 October, Sir Keir Starmer MP, the newly appointed Labour front-bench spokesman on Brexit, called for Parliament to be given the chance to scrutinise the Government's negotiating position before Article 50 is triggered. This has served to remind everyone that there is a significant majority in both Houses of Parliament that still believes the United Kingdom would be better off within the European Union and, at the very least, within the Single Market. Furthermore, although our membership of the EU rests upon a Treaty – signed by the then Prime Minister (Edward Heath) under the Royal Prerogative – Brexit is going to require Parliament to pass legislation: a lot of legislation. Keir Starmer has provided timely leadership and the natural anti-Brexit majority in Parliament has begun to coalesce, for the first time since 23 June. The "Brexit honeymoon " is certainly over. The Government therefore had to compromise; and agreed a form of words that, at least partially, conceded that MPs will have a central role in the Brexit process: "… this House… believes that there should be a full and transparent debate on the Government’s plan for leaving the EU; and calls on the Prime Minister to ensure that this House is able properly to scrutinise that plan for leaving the EU before Article 50 is invoked…" So the role of Parliament in the process ahead should not be underestimated. This is only reinforced by the case that Lord Pannick has brought to the High Court. Pro-Brexit media have portrayed that initiative as a time-wasting, futile and almost frivolous exercise on the part of so-called "Remoaners ". However, the argument being made so closely echoes the sentiments expressed by Members of Parliament in debate that it must be taken seriously, not merely as an explosion of predictable pro-EU sentiment from an alleged "privileged, cosmopolitan minority", but as a constitutional argument of great importance. The role of Parliament is paramount. Possible Future Models for the UK-EU Relationship The practical, as well as political, implications of Brexit itself are only now beginning to sink in. We shall never know for sure the full extent of investment decisions that will be changed, or employment opportunities that will or will not be created, as a consequence of the result of the referendum on 23 June. What is certain is that the process will be anything but simple, both for the UK and also for the other current member states of the European Union. As soon as Article 50 is invoked, a two-year countdown will begin. Two years is not very long for such a complex set of negotiations The question still arises, of what model will be sought for the future. Boris Johnson, whilst campaigning for full withdrawal from the political institutions of the EU, has emphasised that leaving the EU is not the same as leaving Europe. Shared objectives and interests are not going away; and shared endeavours will continue. Again, that necessitates goodwill on all sides. The Prime Minister is acutely aware of this. At a purely political level, migration remains the principal concern. For business, the focus is much more on access to the free market and the question of "passporting ". There is an obvious tension between two objectives – promoting business and limiting migration. It’s never wise, to set out one’s objectives too definitively before a negotiation begins but ministers are already coming under increasing pressure to reassure UK businesses about the future. The apparent hints at party conference that the UK will leave the Single Market have seemingly undermined sterling; upward pressure on inflation and interest rates cannot be far behind. The attitude of other EU states is hard to gauge. On the one hand, there is the argument that, were the UK to enjoy too comfortable an exit and a "soft landing ", that might embolden other nations, notably the Netherlands and Sweden, to consider seceding from the EU as well. On the other hand, if the treatment of the UK seems vindictive, that would surely serve only to strengthen the hand of the increasingly powerful populist leaders in those and other nations, most of whom are well disposed towards the UK, as they seek to demonstrate that the EU is arrogant, insensitive and out of touch. It seems to me, therefore, that there is everything to play for. I would not advise anyone to take precipitate actions, but, as well as hoping for the best, it’s certainly advisable to prepare for the worst. Personally, I am strongly attracted by a stint for the UK in a kind of "safe zone " – the obvious candidate being the European Economic Area (EU nations plus Norway, Iceland and Liechtenstein), enabling our citizens, our political system and our businesses to adjust at a realistic pace to the new realities of Brexit. The hurdle will inevitably be hostility to free movement and migration. More than ever, all roads lead to that knotty and politically high-octane question. In summary ° This is a new government, whose priorities and objectives are only now becoming clear. ° For the time being, we remain full members of the European Union. ° Our future relationship with the EU will be determined principally by political considerations, not economics. ° There are no meaningful precedents for this – and a bespoke situation is going to require a bespoke solution. ° The EEA may provide a useful transitional arrangement. ° It is the policy of the Government – and of all ministers within it - that the referendum result from 23 June must be respected – and "Brexit means Brexit ". ° It is too soon to say whether full access to the Single Market and/or the "passporting " system will be maintained post-Brexit. ° The formal application to secede from the EU, under Article 50 of the Lisbon Treaty, will be made early in 2017. ° Despite talk about a second referendum and successful legal challenges to Brexit – the political imperative is such that the status quo cannot endure. The question is, what precise shape will Brexit take and what will our future role be? ° It is critically important that the voice of British industry and business should be heard, loudly and clearly, from now until the conclusion of negotiations under Article 50 – there is still "a great deal to play for ". .