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It’s Brexit Time – Dividend or Disappointment?

The United Kingdom has formally left the European Union. More than three years after the EU membership referendum and ten months later than originally planned, its finally Brexit Time.

Whether or not clocks chimed or Big Ben bonged to mark the moment of the UK’s departure from the EU, time will still shape the Brexit process. 11pm did not signal Getting Brexit Done; its only just getting started.

In the days and weeks ahead, Leavers and Remainers might find themselves in the odd position of sharing a similar sentiment – disappointment. Remainers will obviously regret that neither political nor legal tactics brought the Article 50 withdrawal process to an end. Leavers, however, might also wonder what if anything has actually changed. With the UK immediately entering into a transition period in which the UK continues to be bound by EU law (including new rules adopted between now and the end of the year) and to make payments to the EU, not much feels different.

But once we get beyond the immediacy of 31 January and look towards 31 December 2020 when transition ends, how should we evaluate Brexit. I suggest there are five tests that Brexit needs to meet. These are expressed in terms of a Democratic, Economic, Social, Green and Stability Dividend.

A Democratic Dividend

The first test is whether there is a democratic dividend from Brexit. If Brexit means anything it must surely be a sense that the capacity for collective self-government has increased. Measuring this is, of course, tricky. It also has to reflect the changing quality of self-government in the UK. First and foremost, a democratic dividend cannot just enhance the capacity of Whitehall and Westminster to govern but must also respect and enhance the opportunities for democratic self-expression at sub-state levels. But it should also be the catalyst for change that looks beyond the constitutional settlement as it currently stands to ask what sorts of institutions and mechanisms does a modern democracy need to ensure oversight and accountability for decision-making.

An Economic Dividend

Although sometimes presented as a price worth paying for a Democratic Dividend, its hard to imagine that people want Brexit to make them poorer. After a decade of cuts in public spending, increasing housing costs and stagnating wages, people want to feel that things are improving economically. Much of the anxiety over migration was really a concern that the country did not have enough resources to go round. So a key test for a post-EU UK is whether it leads to economic growth and work that actually pays.

A Social Dividend

It is not enough for Brexit to deliver an Economic Dividend to those who are already well off. Income inequality has been a challenge in the UK for all of the 21st century. A democracy that considers its citizens to be free and equal cannot sustain itself if economic inequality means that some citizens have a much larger set of life choices (and life expectancies) than others. Indeed, whatever the quantification of the claim that more money will be available for the NHS, it is a clear test of Brexit that it is capable of improving health outcomes particularly for those who have struggled to access, or to experience, a consistent level of social support.

A Green Dividend

Whether or not any of the other dividends can be achieved becomes irrelevant unless the climate emergency is tackled and tackled quickly. Every country has its role to play. But that also includes a capacity to work with other countries to ensure that swift and effective action is taken. EU membership was one means of states taking collective action and for the UK it must find ways of exercising global leadership while leading by example at home.

A Stability Dividend

This is perhaps a less obvious, and in some respects, a contestable dividend. For some, the point of Brexit is that it is a destabilising and disruptive force intended to break patterns of economic and social relations that either never or no longer deliver on their democratic, economic, social or environmental goals. But living with instability and change is also costly. At some point, a new equilibrium has to form even if at some future juncture it is replaced. The appeal of ‘Getting Brexit Done’ as a political slogan lies in its promise of an end to the rancour and division unleashed by the 2016 referendum.

Using these broad categories, it would be worthwhile to build a Brexit Scoreboard with a set of key indicators with which to measure the occurrence and extent of these dividends. After all, Brexit cannot just be a state of mind. If it doesn’t actually make things better then any immediate sense of disappointment may become a longer term disillusion with the capacity of politics to achieve real-world outcomes.

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Getting Brexit Started – Does the General Election Result Change Johnson’s EU Strategy?

Now that Boris Johnson will be leading a government with a sizeable majority in the House of Commons, some degree of normality will return to British politics. That normality is that governments get to govern with little capacity for the Westminster Parliament to block the will of the Executive. Whatever happens on the Opposition side – including the sizeable block of Scottish National Party MPs – nothing changes the fact that the Johnson Government now has, more or less, a free hand in both its domestic and European policy agendas. On Brexit, this has some interesting implications.

There has been some speculation that the political freedom the Prime Minister will enjoy will allow him to reveal his “true self” and to pursue a policy on Brexit that is less beholden to the extreme Eurosceptic elements in his own party. The argument then runs that we could be looking at a much less “hard” Brexit than the rhetoric might have suggested. For two reasons this assumption looks doubtful.

The first is that the idea that there is a different Boris Johnson waiting to be revealed doesn’t have an obvious basis. That he is prepared to adopt different positions to suit circumstances and to seek political advantage is a better characterisation of his pollical demeanour. That could, of course, mean that the Prime Minister might seek to adjust his Brexit strategy in light of the new political realities but that is not the same as the revelation of an intrinsic and authentic political credo hitherto constrained by prevailing political conditions.

The second reason for doubting a less “hard” Brexit is to do with the problematic characterisation of different choices as “hard” or “soft”. This language suggest a continuum of possibilities with positions hardening or softening. In reality, the choice the Prime Minister will have to make will be much more binary. It’s a choice between a loose “free trade” discipline in which a future EU-UK relationship will be better than World Trade Organisation terms but significantly reduced compared to those of EU membership, and a “free movement” discipline in which the future relationship entails a pre-commitment to regulatory alignment with the EU as a condition for maintaining market access on terms similar to those currently enjoyed. There seems little reason to believe that a Johnson Government will shift from a free trade approach to a free movement approach anytime soon.

The freedom of a working majority in the Commons will also mean that the Prime Minister should be able to re-introduce a Withdrawal Agreement Bill to implement in domestic law the agreement negotiated between the EU and the UK settling the terms of the UK’s withdrawal under Article 50 TEU. Indeed, what will be different this time round is that any attempt to tack on a requirement of a further referendum to approve the Withdrawal Agreement will fail if introduced in the Commons. Of course, the Bill could still encounter headwinds in the House of Lords but while the unelected chamber may express its views it will be unable to prevent the Commons from removing amendments with which it does not agree. All of which will set the stage for the EU and UK to complete the formalities and for the UK to formally withdraw from the European Union on 31 January 2020. But this is when the real work begins.

Far from the Prime Minister having an “oven-ready” Brexit, he barely has the recipe let alone the ingredients.

Even assuming that the Johnson premiership remains committed to doing a less complex trade deal, there will be much for the two sides to negotiate and resolve. Although it is often repeated that these negotiations are made easier by the perfect alignment of the EU and the UK at the point of withdrawal – a position that will be maintained during the transition period that follows withdrawal – that alignment might, paradoxically, make things more difficult. Because in any normal trade negotiations the parties are seeking to improve on the status quo and to upgrade their common interests beyond default international trade rules like those of the WTO. For the EU and the UK, the opposite applies. The trade relationship will be downgraded as the UK gives up market access in order to have greater trade and regulatory autonomy. And in areas like financial services there will be difficult tensions to be resolved. The size and importance of the City of London ought to put the UK in a strong bargaining position with the EU. Yet having gone through a financial and economic crisis and having put in place stronger rules-based governance backed up by new regulatory bodies, the EU will be reluctant to concede to the UK powers of self-regulation unchecked by EU rules and institutions.

There is also a continuing time pressure. If time has shaped Brexit in respect of the process of withdrawal, then it continues to shape Brexit as negotiations on the future relationship get underway. The transition period that begins as soon as the UK leaves the EU is scheduled to end on 31 December 2020. This is the true “No Deal” cliff-edge moment because if there is no new treaty on the future relationship in place and in force on that date, then the EU and UK will default to WTO trade terms (subject to the application of the Protocol on Ireland and Northern Ireland). On the UK side, provided a deal can be done, we ought not to expect too many difficulties in obtaining domestic legislative approval given the size of the Government’s majority in the Commons. However, the EU side may be more difficult as it may be harder to maintain political unity as diverse political and economic interests of EU Member States are revealed and if a negotiated agreement requires domestic approval in all the other EU states (something that was not required for the Article 50 withdrawal agreement). Getting everything in place in one year looks ambitious when we reflect on the problems of the last two and half years.

The EU and the UK have the option to extend the transition period by one or two years. But that option is a one-time option and it must be exercised by 1 July 2020. Throughout the election campaign, the Prime Minister and other senior ministers repeated that they would not seek to exercise that option. This is perhaps one area where the Prime Minister may feel he now has the political capital to change his mind but that may not happen until the last moment with the PM preferring the pressure of time to focus minds and accelerate progress on the negotiations.

So not only is there not an over-ready Brexit, Brexit will not be “done” by 31 January 2020. The UK will no longer be a Member State but it will not have defined its future relationship with the EU and it will be in a period of transition in which the UK will be bound by EU rules till the end of the year. The Prime Minister may now be in a better position domestically to pursue a Brexit policy but he will now have to do the more difficult task of negotiating and delivering a Brexit deal whose impact on the UK economy is the key risk to his ability to deliver on all his other promises including on the National Health Service.

Getting Brexit Done turns out to be Getting Brexit Started.

 

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Is a Pledge of a Brexit Referendum within Six Months Credible?

The election on 12 December will require the political parties to set out their positions on Brexit. Already, Labour is pledging in its ‘Plan for Brexit’ that it will negotiate ‘a sensible deal within three months of being elected’. More dramatically, it also claims it will hold a further Brexit referendum within six months of the election ie sometime in May 2020.

On the first pledge to renegotiate a ‘deal’, this will focus on a new customs union, a close relationship with the Single Market and ‘guarantees of rights and protections’.

What is noteworthy is that these all relate not to the Withdrawal Agreement but to the future relationship which will be negotiated once the UK leaves the EU. These are the sorts of things that have been discussed in the context of the non-binding Political Declaration that will set the framework for those future negotiations.

The EU could be open to that discussion as long as it does not transgress the stipulation laid down in the latest Article 50 extension decision that the EU will not renegotiate the Withdrawal Agreement during the extension period. The problem for the Labour leadership, however, is that means being unable to reopen the Withdrawal Agreement during the period of the current extension.

We have been here before, however, and the second extension decision which kept the UK in the EU to 31 October also contained the same stipulation that the:

‘extension excludes any re-opening of the Withdrawal Agreement’.

Yet following a change in Government in the UK and Boris Johnson’s insistence that the text of the Agreement as it stood would not be passed by the UK House of Commons did lead to a revised agreement being reached during the period of the extension. Nonetheless, the EU might be more insistent on the non-negotiability of its second Withdrawal Agreement especially if it will be asked for a further extension to facilitate another Brexit referendum.

The second claim by Labour in its election pitch is that within six months of being elected it will hold a further referendum. This is more problematic.

As I have explained before, the barriers to a further referendum are numerous, but one of the most obvious ones is time itself. There will need to be time to legislate for a referendum; they don’t just happen. The referendum legislation for the 2016 referendum took seven months to pass. In a further referendum, the issue may be more complicated if moves are made to give voters a wider range of choices than between a Remain option and that of Leaving on a Labour-negotiated deal. Complaints that the referendum would not offer electors either a No Deal option or the choice to approve the Johnson vision of Brexit could both bog down the legislative process and raise issues as to the legitimacy of the referendum. At the limit, voters could be urged to boycott a referendum if it was considered to have rigged the available options.

The question to be put in the referendum would also need to be road-tested by the Electoral Commission. If there was agreement on the structure of the options to be presented to voters that could be done in parallel if the referendum bill also empowered ministers to insert or change the referendum question via statutory instrument. But if there is dispute over how to present the options, then the Electoral Commission might need to wait until a decision was finally taken before then turning to the specific wording of the question.

Even assuming all that could be expedited, far more challenging is the Electoral Commission’s previous best practice approach which anticipates that referendum legislation should be fully in place six month before it is implemented. Note this is before any referendum campaign gets underway. That would see a referendum then being held more than a year after a December 2019 election.

One reason why this six-month gap between completing the legislative process and its implementation might be particularly necessary would be if the franchise were to be extended to 16 and 17 year olds. Time would be needed to mount a registration campaign to ensure that this new group of electors were informed of their right to vote and duly registered. Back in 2016, the website for registration to vote in the EU referendum crashed forcing an extension to the deadline. In order to avoid a reoccurrence of the problem, the Government would need sufficient time for a public information campaign to highlight eligibility to vote and to maximise voter registration.

A request for a further extension to hold a referendum would clearly be necessary given that the current extension expires on 31 January 2020. Once again, the issue for the EU27 will be whether to grant such an extension and for how long. An extension for a further referendum would be difficult for the EU27 to decline. However, a key difficulty for the EU27 would be what might happen if the UK once again voted to leave the EU.

Even assuming that the UK would be in a position to hold a May 2020 referendum and to implement a result to leave the EU – for the sake of argument on 30 June 2020 – the UK and EU would jointly have to decide by 1 July 2020 whether to extend the transition period scheduled to expire on 31 December 2020. To do otherwise would be to leave the EU and UK less than six months to negotiate, agree and conclude agreements on their future relationship. Given the impossibility of that, the UK and EU would face a new No Deal Brexit deadline of 31 December 2020.

One view might be to offer an Article 50 extension to 30 June 2020 on the assumption that a Leave vote could be implemented smoothly and a transition extension also agreed. Others might, however, wonder whether another referendum might trigger yet more domestic politics that would make it less clear whether the UK could leave and enter into a transition period starting on 1 July.

But given what was said earlier, it simply does not seem likely that a UK referendum could occur that fast leaving the EU27 to decide whether to agree to a longer extension to the end of 2020 or even beyond into 2021. A fourth extension in those terms would, in effect render the transition period extension mechanism meaningless and the Withdrawal Agreement would need to be revised to reconsider how any transition period might actually work and on what timescale.

Labour’s Brexit pitch is clear and it is specific. But another referendum in six months stretches credibility.

 

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Extension Time, Election Time – But is it Brexit Time?

For the third time, and in agreement with the UK, the EU has granted the UK an extension to its EU membership. But this extension feels different for two reasons.

First, the extension offered by the EU was a response to a letter sent – but not signed – by the UK Prime Minister Boris Johnson acting in compliance with the so-called “Benn Act” passed by Parliament to prevent the UK leaving the EU on 31 October without a Withdrawal Agreement unless Parliament so decided. The statutory letter asked the EU to grant an extension to the Article 50 withdrawal process until 31 January 2020. Despite some debate about a shorter extension to maintain pressure on UK MPs to pass the European Union (Withdrawal Agreement( Bill introduced to give domestic legal effect to the revised Withdrawal Agreement – and so pave the way towards the UK’s exit from the EU – the European Council took the simpler option of agreeing to the 31 January deadline. The European Council’s decision finesses this by stating that if the respective ratification procedures are completed prior to this deadline then the Withdrawal Agreement will enter into force – and the UK will leave the EU – on the 1st of the following month. However that possibility is in effect rendered redundant by the second difference with this extension namely that it is less about facilitating approval of a Withdrawal Agreement and more about creating time for an early General Election.

Prime Minister Johnson tried – and failed – three times to secure the necessary two-thirds majority among MPs to hold an early election in terms of the Fixed-term Parliament Act. Unless an extension was agreed with the EU, and with the PM having the power to set the date of the election, MPs did not trust the Prime Minister not to use an election to engineer a “No Deal” Brexit. However, with an extension given by the EU and inspired by a proposal floated by the Scottish National Party and Liberal Democrats, the UK Government introduced the Early Parliamentary General Election Bill to obtain an election on 12 December. Crucially it would only take a majority of MPs for the Bill to pass, with the Bill going through all its stages in the Commons in one day.

The SNP/LD proposal – and the Labour amendment to the Bill – suggested that an early election take place on 9 December  meaning that Parliament would be dissolved on Friday 1 November. The Government’s preferred election date of 12 December would see Parliament dissolved on 6 November. The inclination of Opposition parties for the earlier date was designed largely to avoid the Government attempting to get its Withdrawal Agreement Bill passed by Parliament on an accelerated timescale before 6 November leading to a UK withdrawal from the EU on 1 December. Certainly, Opposition parties did not want Boris Johnson to fight an election having delivered Brexit. No doubt recognising that it would be difficult to get MPs to do what they previously refused to do, namely to back a programme motion to push the Withdrawal Agreement Bill through, the Government accepted that it would not be in a position to secure backing for its Withdrawal Agreement Bill. With the Article 50 extension also in place, the Government was able to resist attempts to bring forward the election and, provided there is not difficulty with the House of Lords, Parliament is set to make 12 December the date of the next UK General Election.

This will be the second early election called by a Conservative Prime Minister with a view to getting momentum behind their Brexit strategy. With a greater opinion poll lead than that currently enjoyed by Boris Johnson, Theresa May tried in 2017 to change the parliamentary arithmetic to ensure an easy passage of her Brexit policy through the Commons. Instead  her party lost its majority with all that entailed in terms of her inability to get approval for her Withdrawal Agreement  on multiple occasions and the influence the election result gave to the Democratic Unionist Party as her ‘confidence and supply’ partner.

The outgoing President of the European Council Donald Tusk tweeted that the adopted extension “may be the last one” with patience wearing thin with the UK’s continuing lack of clarity on its Brexit intentions. However, the outcome of a December election is no more certain that the situation in 2017.  A swing to the Lib Dems is simply not going to see them take office and fulfil their commitment to revoke the UK’s withdrawal notification if elected. Even a 10% swing would only increase their representation in the Commons by a dozen or so seats. For the Conservative Party, Boris Johnson’s strategy is predicated on his party taking vote share from the Brexit Party and winning seats from Labour. But Johnson faces the loss of seats in Scotland to the SNP as well as those marginals that the Lib Dems might pick up.

If Boris Johnson fails to win either a working majority or to be in a position to form a minority government then the Brexit impasse won’t be resolved by the election and the UK may find itself it no clearer position on Brexit. That could give EU leaders pause to consider whether the offer of a fourth extension is really desirable. However, if Labour is able to command a majority or to form a minority government then a further Brexit referendum would seem inevitable and would require the UK to seek a fourth extension.

The prospect of a fourth extension is not a happy one for either the UK or the EU. It would also need to be for a longer period of time than the third extension of three months. Even assuming that a referendum was put together quickly, it is hard to see this taking place before June 2020. All of which is awkward given that had the Withdrawal Agreement entered into force, the UK and the EU would have needed to adopt by the end of June a decision on whether to extend the “transition period” for one or two years. As I explain here,  is easy to forget that every single extension of the Article 50 process reduces the duration of the transition period and so limits the amount of time available for the EU and UK to do the really difficult work of negotiating an agreement on their future relationship. The prospect of an extension for a further referendum then begs the question of whether any transition period between exit and a new relationship has any real purpose. That may leave the EU with an uncomfortable choice between refusing a further extension – and so precipitating a No Deal Brexit – or offering a much longer extension to the UK’s membership with a view not only to facilitating a further referendum but potentially opening negotiations that would deal with withdrawal and the future relationship in one package, something which the EU has said it could not do.

Whether or not the UK leaves the EU on 1 February 2020 is largely dependent on the electoral performance of the Labour Party. Labour has been in Opposition for almost a decade. That period has seen the austerity policies of the Conservative-Liberal Democrat Coalition Government followed by the intensely divisive 2016 EU referendum of David Cameron’s Conservative Government. His Conservative successor Theresa May threw away her party’s parliamentary majority and ultimately failed to forge a political consensus on Brexit. The current incumber of No 10 has a certain charisma and is no doubt self-confident after the revision of the terms of the Irish Protocol. But he is not trusted by many and scandals about his personal life and business connections may yet tarnish him. The Windrush affair and the repercussions of the Grenfell Tower tragedy also hang over the Conservative Party. This ought to be an election that any credible major Opposition party should win.

On 13 December it should be clearer whether this is Boris Johnson’s or Jeremy Corbyn’s time of political triumph. But will it be Brexit Time?