Brexit – The Political Implications: A View From Lord David Hunt - DAC Beachcroft

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Brexit – The Political Implications: A View From Lord David Hunt

Published On: 26 September 2016

We are in a situation without precedent. Although the third-ever national referendum was technically non-binding, there is a political consensus that its result simply cannot be ignored. This may require parliamentarians to vote for something that many of them – probably most of them – believe to be against the national interest.

There are court cases in various forms and at different stages in the three jurisdictions of the UK – England/Wales, Scotland and Northern Ireland – designed to challenge the Brexit process, but no one seriously believes they will succeed. If it is the considered view of Her Majesty’s Government and of Parliament that Brexit will happen, then Brexit will happen.

The first and most obvious consequence of the vote for Brexit on Thursday 23 June has been a change of Prime Minister and a far-reaching reconstruction of government.

A Swift, Clean Handover

Had the Conservative Party leadership contest taken place and run its course, we would have had to wait until the second week of September until a new party leader and Prime Minister was elected – almost certainly Theresa May. It is very fortunate indeed both for the Conservative party and, much more importantly, for the country too, that this process did not run its full, protracted course. Because Theresa May was unopposed, she was able to appoint a new government before the summer recess and new ministers had the entire summer, for the crucial task of reading themselves into their roles and acquainting themselves with their departments and their officials, their responsibilities and briefs.

The rapid handover from David Cameron to Theresa did much to calm the markets and should also serve to reassure clients that the negotiations with other EU governments are in safe hands. Nonetheless, there is clearly much uncertainty about the future. As Home Secretary, Theresa May supported the Remain campaign, not vehemently, but on balance of advantage. As Prime Minister, she has repeatedly asserted that “Brexit means Brexit”, but, wisely in the circumstances, she has not sought to clarify what that means, beyond respecting the referendum result. Her approach so far has been that the referendum result gives her a mandate to negotiate, no more or less, what she believes to be the best possible terms for the UK to leave the political institutions of the European Union.

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 it is we are asking other countries to agree. Quite rightly, the Prime Minister will not be rushed. She has no intention of triggering the formal exit process – by means of Article 50 of the Lisbon Treaty – until 2017 at the earliest. She will not do so until she is persuaded that the UK's interests will be fully protected. As soon as Article 50 is invoked, a two-year countdown will begin. Two years is not long for so complex a set of negotiations.

When ministers all returned to their desks at the beginning of September, fully briefed and also (one hopes) refreshed, the new government really began to take shape, for the first time, culminating in the announcement about selective education. The next major event in the political calendar is the Conservative party conference, in Birmingham in the first week of October. This will be very significant indeed: it will be 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. Inevitably, this creates some uncertainty, but the calm authority of the Prime Minister, in the House of Commons and outside it, has helped to keep the economy on track, as the latest employment figures (published on 15 September) demonstrate.

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, either for the UK or for the other current member states of the European Union. During the next two years, there are major parliamentary elections in two thirds of EU nations. Right across Europe, those elections will be contested by anti-EU, populist parties; and in some countries, such as the France and the Netherlands, those parties enjoy significant support.

The Role of Parliament

I am a member of the House of Lords Constitution Committee and on Tuesday 13 September we published our report on the Invoking of Article 50 – the formal application to withdraw the United Kingdom from the European Union. Our 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 potential minefield, without precedent.

There is still not a firm, decided and collective view amongst ministers about when to make an application for withdrawal under Article 50. Pressure is growing elsewhere within the EU for us to make the application. The decision is ours and ours alone, but the hope remains that the negotiations will be carried out in a reasonable, amicable and positive spirit – and no one wishes to jeopardise that.

Many now believe early 2017 is the likeliest timing, but there is also an argument for having the essential structural elements of our new relationship with the EU fully agreed before the application under Article 50 is made. There are good arguments on both sides. It is possible Article 50 will be triggered early in 2017, but there is a persuasive counter-argument that it would be more prudent to wait until the autumn. By then critically important elections will have taken place in Germany, France and the Netherlands – elections that could significantly change the face of European politics and, potentially, the nature of the EU itself. It can even be argued that an application to secede under the terms of Article 50 should not be served until negotiations have been completed and a new arrangement is fully agreed.

Possible Future Models for the UK-EU Relationship

The question then arises, of what model will be sought for the future. Boris Johnson, whilst campaigning for “hard Brexit” – full withdrawal from the political institutions of the EU – has emphasised that leaving the EU is not the same as leaving Europe. Our shared objective and interests are not going away; and our 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. The challenge for ministers is to deliver a bespoke outcome that displeases everyone equally. It is not always wise to set out one’s objectives in too definitive a manner before a negotiation begins – but once Parliament resumes its activities after the party conferences, ministers are going to come under increasing pressure to reassure UK businesses about the future.

The attitude of other EU states is also 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 which 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, whilst 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. This would make economic sense and it would also, in the medium term at least, stabilise the status of citizens from other EU nations living here in the UK. I have no doubt the Government is well aware of this “human factor”.

Another factor – somewhat neglected in all the speculation and coverage – is the future status of the one land border between the UK and the EU, namely the border between Northern Ireland and the Republic of Ireland. The gradual vanishing of that border has been a crucially important element in the “normalisation” of relations between the UK and the Republic and also in the development of the Northern Ireland peace process. To reinstate a physical border would jeopardise all the progress that has been made, yet not to do so would make it impossible to assert that the borders of the UK have been fully secured again, including for EU citizens. At the very least, this is an important challenge for Theresa May and her team.

Theresa May has inherited from David Cameron a small but stable majority in the House of Commons, which should be sufficient to see her through to May 2020. Indeed, under the terms of the Fixed Term Parliaments Act 2011, it would be extremely tricky to engineer an earlier election. The overriding political imperative therefore is to be able to demonstrate by the beginning of 2020 at the latest, that the UK has disengaged itself from the political institutions of the European Union.

In summary:

  • This is a new government, whose priorities and objectives will not become entirely clear until the party conference in early October.
  • 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, is likely to be made some time in 2017.
  • It is best to disregard talk about a second referendum and successful legal challenges to Brexit – the political imperative is going to prove irresistible. The question is, what precise shape will it 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”.