11 February 2019

Alasdair Smith is an Emeritus Professor of Economics at the University of Sussex and is a member of the UK Trade Policy Observatory

Parliamentary discussions on Brexit seem to be making no progress towards a decision that can command a majority and the timetable for future Parliamentary votes is uncertain. The only result of last week’s discussion in Brussels was an agreement to hold further talks later this month, a jaw-droppingly relaxed timetable in the circumstances.

The Labour Party leadership has produced a statement with two objectives both of which are probably unattainable: a customs union with the EU in which the UK has a significant voice in the setting of EU trade policy, and a close relationship with the single market that falls short of membership. The Conservative Party is having internal discussions (with civil service support, a constitutional innovation) about the Malthouse Compromise, whose oxymoronic objectives are a new backstop that is not a backstop or an agreed withdrawal without a withdrawal agreement.

Out of this unpromising material, however, some outcome must emerge before March 29.

One possibility is that the Parliamentary stalemate continues, the Prime Minister cannot get a majority for her Withdrawal Agreement (WA), and we face a No-deal Brexit. Some Brexiteers would welcome this outcome, but Mrs May knows that a No-deal Brexit will be an economic and political disaster. It’s certainly not what voters were promised in the 2016 referendum. It should be unthinkable to inflict such an outcome on the country without allowing the voters to revisit the issue.

The alternatives to a No-deal Brexit

To avoid a No-deal Brexit, Mrs May must somehow fashion a Parliamentary majority for a deal. It’s not enough, however, to get the WA through Parliament before the end of March; delivery of the deal will require years of difficult negotiation of the new long-term relationship with the EU and Parliamentary ratification of that long-term deal. There’s then a time consistency problem: how can we get politicians to keep their promises over a long period when they cannot make binding commitments about future votes.

One way to a majority would be to persuade the hard-line Brexiteers (as ministers such as Michael Gove and Liam Fox have persuaded themselves) to swallow their doubts about Mrs May’s deal and just ‘get Brexit over the line’ (possibly with the votes of some Labour MPs), in the hope that things can be moved in the Brexiteers’ direction in the next few years. That majority would have to include a very large number of MPs who voted against the Prime Minister’s deal first time round, many of whom would happily now vote for a No-deal Brexit. The Government, whether led by Theresa May or a successor, will face difficulties during the transition period persuading the Brexiteers to sign up to a long-term agreement with the EU that retains an Irish backstop and keeps the UK in a close economic relationship with the EU. The proposed long-term agreement with the EU might not get through Parliament. We could end up in 2021 or 2022 trading on WTO terms with the EU, not the outcome that most of Mrs May’s coalition thought they were signing up for.

Another way to create a majority for the existing Withdrawal Agreement would be to assemble a cross-party coalition for the softest possible Brexit in which the UK remains in a customs union with the EU and in the single market. While this ‘Norway+CU’ option might command a majority (especially if government ministers are freed or free themselves from the constraint of collective responsibility), the actual implementation of Norway+CU over the next two years would face formidable political obstacles given that it is opposed by a significant proportion of the Conservative Party and crosses Mrs May’s red lines. A cross-party alliance might get this through Parliament in March, but it’s hard to see the cross-party alliance forming a stable coalition government. It’s equally hard to see how the current government, necessarily led by a new Prime Minister, could implement this deal against the opposition of perhaps half the Conservative MPs.

Some commentators have noted that the Labour Party’s stated policy and the Norway+CU option would require the same WA as Mrs May’s deal and suggested that supporters of these policies should sign up for Mrs May’s deal. This is a dubious argument. “You know you need to take a bus to get to your destination. Here’s the bus. Don’t worry about the fact that the destination board shows it’s going somewhere different from where you want to go.” MPs should get on the bus only if they think the destination is correct: they should approve the WA only if they want the particular long-term relationship with the EU which the WA will be used to achieve.

Another referendum can help ensure promises are kept

Here’s the time consistency problem: MPs should want to tie the WA to the final relationship but they cannot make credible commitments which bind them in future parliamentary votes on that relationship. A fresh referendum can provide the rope which binds the politicians’ arms to the mast and forces them to live up to their promises. The MPs Peter Kyle and Phil Wilson have made the case that a new referendum is needed to free up the logjam and I am arguing in support of their case.

If Parliament signs up to Mrs May’s Deal which commits us to close alignment with the EU in regulatory and trade policy for the foreseeable future and that decision is confirmed by the voters in a referendum, Brexiteer MPs will find it hard to push the country on to a different post-Brexit path. Equally, if Parliament signs up to Norway+CU, with its implications for freedom of movement and for the UK being a rule-taker, confirmation of that decision in a referendum will enable the decision to be implemented by whatever government is given the task.

In short, if Parliament fails to break the current Brexit deadlock, the decision will have to be passed back to the voters, perhaps in the kind of two-stage referendum proposed by Alan Winters. If Parliament does make a choice of a preferred version of Brexit, the implications of that choice need to be clearly spelled out to voters and ratified in a referendum to give us some confidence that the politicians will fulfil their promises. The decisions in principle should be made before the end of March: an extension to the Article 50 process will then be needed to accommodate the referendum.

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The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory.

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