09 July 2018

With the Chequers deal, the Prime Minister seemed to have convinced her Cabinet to accept some cake was off the table. But even if she makes it through David Davis’ and Steve Baker’s subsequent resignations, she is far from making it through the political minefield of Brexit, says Jill Rutter.

David Davis came and listened – and resigned. After a year of threatening to walk, the Chequers deal was the final straw (or pretext). He took with him DExEU Minister Steve Baker, though after some initial confusion, not Suella Braverman. Meanwhile, other Brexiteer Cabinet ministers, hand-in-hand with their Remainer counterparts, penned joint articles in the Sunday press selling the Prime Minister’s compromise.

The Prime Minister chooses the economy over sovereignty in the Chequers deal

The Chequers deal fleshes out some of the ideas the Prime Minister hinted at in her Florence speech and adds a bit more detail to her Mansion House speech.

But it abandons the notion that the EU would be willing to recognise UK regulation and allow unfettered access to the Single Market on the basis of UK rules. Mutual recognition has eloquent proponents outside government and within: but as a principle, it was always going to be a few bridges too far for the EU. Even though she talks of a “common rule book for goods”, the Prime Minister accepts the EU will set the rules.  

She tries to square that with a retrospective nod at “managed divergence” – the idea that Parliament could reject EU rules (no automatic alignment) and suffer consequences. But in practice, would or could the UK ever accept managed divergence? Or was it, as Andrew Marr put to Michael Gove, “fake sovereignty”?

For example, a decision to diverge on chemicals regulation could, if the UK had been able to stay in the European Chemicals Agency, mean that the UK would lose access for its chemical industry and incur all the costs of setting up a new independent body to administer UK rules. Moreover, the possibility of that flexibility leading to loss of access would make the UK a less attractive place to invest compared to those places firmly inside the Single Market.

The services sector is starting to mobilise in favour of the Single Market too

If the manufacturers could point to their voices finally being heard at Chequers, with language about just-in-time supply chains, many in the services sector are now having their #ustoo moment.

There are four reasons why the Government may be looking for a deal that protects the goods sector’s access but allows the much bigger services sector to enjoy the benefits of "future regulatory flexibility" and trade deals.

  1. The Government knows that it gave away the game on goods with the Northern Ireland backstop, and this deal allows government to minimise the scale of alignment it is willing to sign up to (the 80/20 rule).
  2. The Government believes it can do great things on trade deals in services. This is an area where it would be good to see concrete evidence of the possibilities the Government has identified.
  3. The Government equates the interests of services generally (digital, broadcasting, transport, etc.) with financial services, where fears future over regulation from Brussels without the UK voice may outweigh the benefits of passporting rights into the EU.
  4. The Government realises that full Single Market makes freedom of movement an unnegotiable EU demand – as opposed to a mysterious "mobility framework".

The Brexit white paper will need to persuade service industry businesses that the Government has their interests at heart. Otherwise, this battle will run and run and the Prime Minister may face a pincer movement from business and the EU for full Single Market membership though the European Economic Area.

The EU would have to move a lot to make Chequers the end point

The Cabinet seemingly assumed for a long time that all it had to do was resolve internal divisions and the EU would sign up to whatever it proposed. And while Michel Barnier, the EU's Chief Negotiator for Brexit, says he will hold fire until he sees the white paper, the Chequers deal would require the EU to move a lot on sectoral cherry picking, four freedoms indivisibility, and the role of the European Court of Justice.

That leaves aside politically fraught issues like fish, where the UK revels taking back control of our waters but the EU has demanded continued reciprocal access as a condition for a trade deal. The EU has a tactical choice: should it pour cold water over the Prime Minister’s plans? Or should it, as David Davis fears, pat the Prime Minister on the head, thank her for moving and look for the UK to make further moves in the autumn?

Since last October, the EU seems to be helping Theresa May survive. The next few days will show whether they still think she is their best bet.

The Prime Minister still faces big parliamentary hurdles on customs

The Government’s choreography was Chequers meeting on Friday, white paper on Thursday, and then the long-postponed customs and trade bills back in the Commons on Monday and Tuesday next week. The new deal on customs was supposed to see off the threats of pro-customs union rebellions to allow those bills safe passage to the Lords.

It is not clear yet whether the arrival of the new Brexit Secretary Dominic Raab, who was not at Chequers, changes that timetable. If the Prime Minister runs into a brick wall at the 1922 Committee and or the white paper is delayed, those bills may be postponed again.

Time is running out to end the Brexit paralysis that has been bedeviling preparations for months

The timetable is already heroic. Chequers was a belated attempt to unlock the Brexit paralysis afflicting the massive task of negotiating our future relationship and legislating and implementing. But today’s chaos risks further delay. 

Only last week, former DExEU Minister Steve Baker was celebrating signing the first statutory instrument under the EU Withdrawal Act. And even on Friday it looked like the Prime Minister had pulled off the trick of telling her Cabinet to put up or shut up – and they had taken the second option.

Just 48 hours later, with Davis and Baker gone, the question is whether she loses control of her party and has enough authority to send her Europe Adviser Olly Robbins and Dominic Raab off the Brussels next week for more negotiations.

The nation is wondering whether the England football team will make it to the weekend. Parliament is wondering the same about the Prime Minister.

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