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Political self-interest

Standing in the way of a deal is political self-interest. The Prime Minister needs the EU to soften its position and meet her somewhere near halfway on the Irish backstop issue. She has talked herself into a rhetorical corner in ruling out any solution that involves Northern Ireland entering a customs union on its own. For the PM, it is essential that the EU gives way on the demand for a UK-wide customs arrangement as the basis for the backstop. There are signs that the EU may be willing to give some ground, but there are limits to its flexibility. European elections are due to take place in May next year and put a critical political slant on the Brexit process. There is no way the French and German Governments will permit a Brexit deal that appears to favour the UK. That would merely embolden the populist Eurosceptic voices in their own states. As Chancellor Merkel has said,  the future relationship with the UK will have to feel different post-Brexit.

That poses a significant problem for Theresa May in handling domestic politics. The Labour Party is pledged to hold any Brexit deal up to six tests that are unpassable. There was some suggestion that this hardline might be softening at the Labour conference, where Jeremy Corbyn sketched out the terms of a deal that Labour might be able to support. But those who saw this as an olive branch have been misled. The Labour leadership is interested in one thing – a general election – and everything it says and does must be viewed through that prism. There is no way the leadership will opt for any action that would avert a crisis for the Prime Minister; it actively wants a crisis. In short, Mrs May cannot count on Labour.

Nor can she count on her own side. Her allies in Northern Irish Democratic Unionist Party have begun to cut up rough; spooked by suggestions the British Government could compromise over regulatory checks on goods coming into Northern Ireland from Great Britain. Party leader Arlene Foster was blunt in response: “All along we have said: ‘No new regulatory alignment’ … The red line is blood red”. Psychology plays an important part here. The spectre of betrayal is ingrained in unionist folklore and the experience of hundreds of years of Ulster history weighs like a nightmare on the brains of the DUP. Their support for any Brexit deal is utterly conditional.

The Prime Minister’s own party is no more reliable. Although she left Birmingham looking less vulnerable to a leadership challenge than when she arrived, it is clear that a growing number of Tory MPs are offside. Minutes before her speech James Dudderidge MP publically announced that he had written to the Chief Whip calling for a leadership contest, and stated that he would vote against any Brexit deal rooted in her Chequers plan. There were more than enough Tory rebels present at the Boris Johnson rally to wreck a parliamentary vote.

What does all this mean for the prospect of a Brexit deal? The risk of a no deal ‘crash out’ has certainly grown in recent weeks. Securing a Withdrawal Agreement is far from guaranteed. The parliamentary vote on any deal will be knife-edge. But if the Prime Minister can get that far she will have some important cards in her favour. The longer the drama plays out – and it looks like things will slip well beyond this month’s European Summit – the greater the sense of crisis. That has downsides but it may help to concentrate minds on all sides about the consequences of failing to reach and ratify a deal. Within Parliament, the prospect of triggering chaos could weigh powerfully on Conservative MPs who fear it might cause an unpredictable election; as well as on some Labour MPs who above all else want to avoid a hard Brexit and indeed a Corbyn premiership.

A struggle for the soul of the Conservative party

Brexit is undoubtedly the most significant issue facing British politics, but for some Conservatives it is almost a proxy battle in a narrower but – for them – more fundamental struggle over the future of their party. It is increasingly evident that there is a deep division on the Conservative side, mirroring that in Labour, between the pragmatist centre and the ideological right. Mrs May epitomises the former. As the Guardian’s Raphael Behr perceptively noted last May, the Prime Minister believes the referendum vote “expressed an epidemic of economic insecurity and cultural dislocation”. Hence her continued focus on controlling immigration and her willingness to intervene in markets and announce an end to austerity. By contrast, the Tory Right believe people voted leave not because they wanted respite from globalisation but “because Britain isn’t globalised enough”.

Their prescription is to free the UK from the social democratic straitjacket that membership of the EU has imposed and to unleash market forces, injecting new dynamism into the economy and society. This is the fundamental political divide that will eat away at the Conservatives in the coming months – and the Budget debate on 29 October may flush out some of the differences of view – as they begin the process of finding a new leader. For although Mrs May has won herself time to try and pull Britain out of the Brexit quagmire, it seems impossible that she will be allowed to fight another general election.

By Lexington’s Director Declan McHugh 
For more information about how Lexington’s Brexit experts can support you please contact: 
Declan.McHugh@lexcomm.co.uk
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