21 September 2017

As the Prime Minister attempts to take back control of Brexit in Florence tomorrow, everyone will be looking to see if she can take back control of her party too, argues Joe Owen. 

The Prime Minister has been relatively quiet on Brexit since the election and instead, the loudest noises have come from a small number of her Cabinet. David Davis, Phillip Hammond and - after some waiting - Boris Johnson have been making their positions clear.

But attention is now finally on what Theresa May will say about Brexit. With less than 18 months until we leave the EU, her Florence speech comes at a critical time.

She started the week by rearranging her chess pieces in Whitehall. Moving Olly Robbins, the official in charge of Brexit negotiations, out of David Davis’ Department for Exiting the European Union (DExEU) sent a signal that she was the one in control of the talks. But perhaps this just created more problems than it solved.

Theresa May will now be looking to end the week by sending another, less subtle, signal with her big set piece speech on Europe. It is her opportunity to show who is running the Brexit show, to break the impasse on the first stage of talks and head in to the Conservative Party Conference on a high.

But if it is received badly it could lead to a breakdown in relations with the EU 27 Member States, her own party - or both.

The Florence speech cannot be for the British audience alone

The UK has spent most of the last year negotiating with itself, or at least that is how some European capitals have read it. Speeches designed to shore up domestic support for the Government’s Brexit approach, either with voters or backbenchers, have not played well with the EU 27 Member States. 

This speech is Theresa May’s opportunity to speak to our European partners, to show that the UK has a plan, and that it recognises and respects the EU 27 Member States own red lines.

European partners will want clarity and confidence that the UK will not attempt to divide the ‘indivisible’.

The message Theresa May sends must be consistent with the one she and her party plans to deliver at Conservative Party Conference in less than two weeks’ time. Any good work in Florence will quickly come undone if there is a sudden change of tone when the Conservatives are in Manchester.

Expect the Prime Minister to make an offer on the Brexit ’Divorce Bill’

The UK Government has set out its position on all but one area of the Withdrawal Agreement: the financial settlement.

An offer on money is expected to be the key to unlocking progress in the first stage of Brexit talks. Without a UK position on the financial settlement, the EU is not going to let talks turn to the future relationship. With time running out, high-level talk of ‘meeting obligations’ is not enough at this stage.

The Divorce Bill covers things like outstanding budget commitments, EU officials’ pensions and contingent liabilities. Early estimates put the bill at anywhere between 25 and 75 billion euros.

Many commentators expect Theresa May to make an offer that equates to around 20 billion euros, covering only outstanding budget contributions. And it’s likely that offer will be in exchange for a deal on transition.

Time is running out to agree a Brexit transition

The ‘Future Partnership’ papers released over the summer confirmed that the UK Government wants a ‘time limited’ transition. We were told that it could include ‘close association with the EU Customs Union’ or a customs union with the Customs Union.

But many in Brussels and the UK will be looking for the Prime Minister to go further, as businesses must start enacting contingency plans if there is no agreement by the end of the year. If she’s going to address transition, she needs to cover two key points.

First is the issue of our relationship with the single market during any interim period. If she wants to offer certainty and continuity, she needs to do more than offer a fudge on customs. The only thing that offers the status quo is the status quo, and for transition that looks like applying all the rules of EU membership but being outside the political institutions.

Second, she needs to spell out how long she wants the transition to be. This seems to be the point where Theresa May is going to have a difficult time in squaring the circle of concerns from business and Conservative backbenchers. Some in her party will want no more than a year, but many in business are talking about an open-ended transition that can only end when the outcome of the talks are clear.

Ultimately Theresa May needs a vision that unites the Conservative Party around Brexit

All eyes will be on how this speech is received in the Conservative Party. Minority Government means that unless her party is united she faces significant difficulties in getting Brexit through Parliament. The EU 27 Member States are not going to want to negotiate a deal that they know will fall at the first hurdle when it’s taken back to Westminster.

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