Unpicking the Brexit Chaos: What Next?

16 January 2019
By Tim Hames, Director General of the BVCA

The irony of the idea of introducing electronic voting in to the House of Commons is that it would make voting there less electric. The sheer theatre of what occurred last night was spectacular. The scale of the Government’s defeat, at the extreme end of expectations, was stunning. The joust that followed between Theresa May and Jeremy Corbyn was captivating. If Brexit were merely a drama or a fiction, it would be exceptional entertainment. In the real world, however, it is deadly serious.

What next? Here are five observations which might prove of some value.

The first is that the issue of Theresa May’s leadership and the question of how the United Kingdom should leave the European Union are now inextricably interlinked within the parliamentary Conservative Party. Indeed, the relationship between the two verges on the symbiotic. If you add up the 196 Members of Parliament (“MPS”) of her own party who backed the Withdrawal Agreement and add the two tellers for it (who by eccentric convention do not vote themselves) plus the Conservative Deputy Speaker (who again by dint of protocol does not participate in votes but is widely viewed as a May loyalist) then the number of Conservative MPs who were ready to back the Prime Minister was 199 while 118 opposed her. This is almost exactly the same as the 200-117 split among Conservative MPs in the confidence motion on Mrs May conducted last month. This is not a coincidence. At least 90% of those Conservatives who supported the Withdrawal Agreement will also have endorsed her continued leadership in that secret ballot on December 12th while at least 90% of Conservatives who entered the “No” lobby at about 7.30pm yesterday will have rejected her continued tenure 34 days previously. There are now, in effect, two different sets of Conservative MPs masquerading as a single parliamentary party.

The second is that this deep division has additional consequences. Even if the Prime Minister can convince the EU to offer a concession that draws the DUP, (on whom the government relies for its majority in the House of Commons), back on side (a necessary condition for any version of Plan A to have a prayer of passing), there will still probably be a hard core of her own MPs who will find a reason different from the Irish border backstop dilemma to oppose her deal. The size of that faction is difficult to estimate but it is in a range of 15-50 MPs. That means that Mrs May has to offer something of substance around the continuation of EU rules relating to workers rights and environmental protection to a block of moderate Labour MPs to cancel out her own enemies.

The third is that the scale of internal opposition to the Prime Minister is such that it is inconceivable that she could remain in office beyond this calendar year. At some point, she will have to make her own departure part of the package that allows a majority in the House of Commons to seal a deal.

The fourth is that the most likely form of a Plan B that could secure majority backing is a variant on the “Norway for Now” or “Norway Plus” model that has been quietly acquiring interest among MPs. This will not happen immediately as other options – the present Plan A+, an outright no deal and a second referendum before the UK exits the EU – have to be eliminated or be marginalised first. This alternative scheme could also come in one of two forms. It could be put on the table as an extra option for the UK in mid-2020 if it is obvious that a free trade agreement will not be finalised by the end of that year as an alternative to the current binary choice between extending the transition period or entering into the backstop. This would be (just about) consistent with a reworking of the Withdrawal Agreement as it exists today. Alternatively, it could replace that Agreement outright.

Finally, we are close to but not quite at the moment when an extension of Article 50 becomes more likely than not. The beginning of next month is probably the true tipping point in that regard. If that occurs, then the revised date would probably be near the end of July (July 26th is doing the rounds) or possibly the close of September (with September 27th a dark horse date). What is less clear in such circumstances is whether Mrs May would want to or be allowed to remain as Prime Minister after such a dramatic reversal of position. That too will resolve itself within a matter of weeks.