Soft or Hard Brexit: Do the Political Parties Know What They Want?

Kirsty Hughes

Extended Article

The varying stances within and among the UK’s parties on the shape of Brexit makes the parliamentary politics around it unpredictable, writes Kirsty Hughes. She argues that, while parliament may well vote to remain in the EU Customs Union but not in the Single Market, the trend is towards a hard Brexit and indeed the UK’s ambitions are dependent on the response from the remainder of the EU.

Soft or Hard Brexit: Do the Political Parties Know What They Want?
Theresa May First PMQs, UK Parliament (Jessica Taylor), CC-BY-NC-2.0

Amidst the rapidly changing politics of Brexit, and the furore around the Article 50 judgement, it seems that the big division between the government and opposition parties is whether the UK heads towards a ‘soft’ or a ‘hard’ Brexit. But with Theresa May denying she wants a hard Brexit, and Labour and the Lib Dems not in the same place on what a soft Brexit looks like, the question arises both as to how meaningful the soft/hard distinction is, and whether any of the parties really know what they want from Brexit.

Currently, both the Conservative government and Labour say they want access to the EU’s single market while controlling migration to some degree. This would suggest some sort of ‘bespoke’ deal – in effect, a comprehensive UK-EU trade and investment agreement. In contrast, the Lib Dems, SNP, Greens and some Tory backbenchers want to retain membership of the single market – and so remain in favour of unfettered free movement.

UKIP, inevitably, wants a hard Brexit – outside the single market and customs union with strong migration controls. How close or different the government and UKIP positions end up being is yet to be seen, although there are certainly similarities. But Theresa May is only slowly starting to give some glimpses of the government’s approach – a position that is surely unsustainable, and undemocratic, whatever the ruling of the Supreme Court on the Article 50 case.

Labour’s Keir Starmer has said in the last few days that Labour wants to stay in the customs union while the Tories have yet to pronounce clearly on this, with almost daily reports on divisions in May’s cabinet on Brexit policy choices. This could become a strong point of division. Meanwhile, the SNP will produce proposals for how Scotland can stay in the single market in mid-December and may then clarify their currently unclear position on the customs union. Nick Clegg, as LibDem Brexit shadow, has written of the costs of leaving the customs union but the Lib Dems key negotiating demands do not include, as of now, staying in the customs union.

How much impact these varied and emerging opposition stances will have on the direction of Brexit, as opposed to the wider public debate, will depend on whether the Supreme Court goes along with the High Court’s judgement and insists on a role for parliament in triggering Article 50, and on whether the government decides, or is guided by the Court, that it must bring forward a bill rather than just a resolution to the House of Commons.

Whether the UK ends up with a harder or softer set of Brexit goals, the response of the EU27 will obviously be key. European Council President Donald Tusk said last month that the only choice was between a hard Brexit or no Brexit. This raises the question whether a soft Brexit is even possible – as well as whether there can be agreement on what it is.

Parties’ Diverse Views – Single Market or Not

Theresa May’s speech at Tory party conference in October gave away some of her views on Brexit: a new immigration policy – no more free movement, no role for the European Court of Justice and a Great Repeal Bill to ensure the UK determines its own legislation in future. This sounds like a hard Brexit yet, at the same time, May has said she wants maximum access for UK businesses to sell to and operate in the EU’s single market.

As the row broke over the secret letter of reassurances to Nissan, May suggested that there was no ‘binary’ yes or no answer to whether the UK would stay in the EU’s customs union. It is now suggested the government will also look for a strong, ‘hybrid’ deal for financial services.

This, and other comments, suggest that May is looking for a bespoke trade and investment deal that will aim at no tariff barriers, ‘regulatory equivalence’ to minimise non-tariff barriers, and special sectoral deals beyond that so that bureaucratic barriers – such as ‘rules of origin’ declarations, or the way equivalence is defined – do not totally disrupt just-in-time production in sectors such as automotives or undermine the financial services sector.

This approach is certainly a strong contrast to that of the Lib Dems, who want the UK to stay in the single market and keep free movement of labour. In effect, the Lib Dems are proposing that the UK becomes a big Norway – in the European Economic Area (EEA) or something close and so implementing all of the EU’s four fundamental freedoms (free movement for goods, capital, people and services). This would certainly be a soft Brexit but it would also immediately raise the question of why the UK would remain in the single market, adopting all the relevant EU regulations and laws while no longer having any say or vote on the rules, rather than staying in the EU.

The perversity of leaving the EU only to stay in the single market without a voice is perhaps why Donald Tusk suggested only a hard Brexit was possible – that and the fact that any modified version of this, such as in the single market but without free movement, would be rejected by the EU.

The Labour party, despite periodic contradictions between the views of its leader, Jeremy Corbyn, and other senior figures, including Brexit shadow minister Keir Starmer, is starting to outline a clearer Brexit position. It has, after some confusion, stated in recent days that it will not block or delay the triggering of Article 50, though if a bill comes to the House of Commons it would put down amendments. Labour wants access to the single market – rather than remaining in it (Jeremy Corbyn says simply ‘access’ while Starmer wants ‘the fullest possible access’). In Scotland, however, Scottish Labour is supporting, so far, efforts to see if Scotland could stay in the single market.

Starmer has also said that there would have to be some amendments to free movement of people as part of Brexit – something that brings Labour closer to the Tories, though there are likely to be strong disagreements on what sort of new migration policy. Corbyn has, in contrast, tended to speak positively on migration, so where exactly Labour may land on this is unclear.

In an important new policy statement, Starmer said recently Labour wants the UK to stay in the customs union – which would ensure there were no ‘rules of origin’ bureaucratic hurdles nor tariff barriers. This would, crucially, mean the UK was not in a position to negotiate bilateral trade deals, since it would have to apply tariffs on goods in line with whatever the EU had negotiated.

The government is said to be split, and undecided, on the question of the customs union – but it is hard to see how May could give up the chance to negotiate new trade deals around the world, while still talking up the benefits and opportunities of Brexit.

So both the customs union and the single market look likely to split the parties. If the Tories decide to leave the customs union, that will mark a big difference with Labour – with perhaps the Lib Dems backing Labour on that one. The SNP may not support being in the customs union if the UK is leaving since any special deal for Scotland staying in the single market – or indeed full independence – would then risk a hard border between England and Scotland. But how the government would square not being in the customs union with no hard border between the Republic of Ireland and Northern Ireland is another unknown – with knock-on implications for Scotland potentially.

Yet on the single market, Labour and Tories, and UKIP, appear to agree – good access to the single market not membership of it – and are in disagreement on that with the SNP, Lib Dems and Greens. It implies Labour – just like the Tories – wants some bespoke UK-EU trade deal. But there may be big differences in what sort of deal they would like to see, and how employment rights, environmental and consumer protections are dealt with once repatriated to the UK. And the attempt to negotiate a complex, Heath-Robinson-like, UK-EU deal that replicates as best as possible current economic and trade links will be tough indeed. Any Labour/Tory differences will be very much further complicated by the EU27’s bargaining stance.

Leaving the single market means the UK would risk facing many non-tariff barriers, as firms no longer had access to its level-playing field – financial services firms and others would lose ‘passporting’ rights, and over time, as UK laws diverged from the EU’s, many sectors risking not conforming with EU rules and standards. How costly and damaging these risks turned out to be would depend on the details of the deal the UK finally negotiated – if it succeeded in doing so, and if the deal was eventually ratified across the EU.

In the end, whether the Tories or Labour support a harder or softer Brexit will depend too on what sort of deal the EU is prepared to do – but once the aim is leaving the single market, and not going for an EEA deal, possible outcomes are along a spectrum that can probably best be described as quite hard to hard rather than soft.

The third largest party in the House of Commons, the SNP, would back the UK staying in the single market. Scotland’s First Minister, Nicola Sturgeon, is also arguing for Scotland to have a differentiated deal with the EU so that Scotland stays in the single market even if the rest of the UK does not. Her detailed proposals on this are due in December. Whether these proposals will suggest Scotland – and the UK – should be outside the EU’s customs union, is yet to be seen, though it may be likely.

But Theresa May has said that any deal should be one for the UK as a whole – so the politics of Scotland getting a different deal seem unlikely, and the EU would have to agree too which may also be unlikely. There is a further problem here, while May’s approach remains unclear. If May did get some sector-by-sector deals, that mean some sectors are effectively in the customs union (if the EU went along with such cherry-picking) and Scotland could find it was applying ‘rules of origin’ in some sectors where the rest of the UK was not – not a desirable outcome.

But now the Scottish government has intervened to attempt to join the Supreme Court Article 50 appeal – which could give Holyrood a vote on Article 50, too – then the political dynamics around triggering Article 50, and whether the devolved administrations have a say, add further layers of complexity to any potential bargain around a differentiated deal for Scotland.

Labour’s Keir Starmer has said that there should be ‘special arrangements’ for Scotland, Northern Ireland and Wales. This does not appear to be support for Scotland to stay in the single market although Scottish Labour does support this at present – rather, it appears to be opening up a future battleground over which competences, once returned from the EU to the UK go to the devolved administrations, as well as referencing the challenge of the Republic of Ireland/Northern Ireland border.

How Might the House of Commons Vote on the Single Market and on Triggering of Article 50?

It seems clear from the above that if Theresa May puts down legislation – if the Supreme Court makes this necessary – which states that the aim of Brexit talks is for UK firms to have ‘maximum freedom’ to trade with, and to operate in the single market, then Labour will have no reason to disagree, given its current policy stance.

There will surely be Labour and other amendments to any legislation calling for protection of employment rights, environmental and consumer rights and more. But in a simple vote on access to the single market, the Lib Dems should oppose that given their policy positions, as should the SNP – and indeed the one Green MP – but Labour, and the one UKIP MP, should support such an approach. The Lib Dems have now said they will also vote against Article 50 unless there is to be a second referendum on the terms of the deal, something May will not agree to.

Of course, there are also potential pro-EU Tory rebels such as Anna Soubry to factor into any vote. Soubry is a member of Open Britain, which rather confusingly both supports staying in the single market and having a bespoke deal. This suggests any Tory rebels who agree with this are roughly in the same position as the Lib Dems and should vote with them.

If the Lib Dems, a few Tory rebels, one Green MP and the SNP MPs vote to stay in the single market but Labour does not, then the Tories would not face a serious challenge, although there may be conflict over some specific areas such as employment rights (but this depends on the level of detail in any bill and in amendments).

If Labour changed its position – to one of staying in the single market – then there could potentially be a parliamentary majority for this if there were enough Tory rebels. This would not be a vote against triggering Article 50, but a substantive change compared to the government’s aims – likely to be enough to trigger a general election (if May can get a majority for this).

Whether the customs union issue could also lead to a parliamentary majority against the government is currently fairly unlikely – it would require Lib Dems, Greens, SNP and Tory rebels to vote with Labour on that. At present, the SNP stance in particular is unclear, and so too is the Lib Dems.

Leaving the EU of course covers many more areas than just the single market – from agriculture and fisheries to security, justice and home affairs and common foreign policy. So, there are many areas that a bill to trigger Article 50 could touch on. But for now, all the parties seem to be united in treating the single market as the key issue of contention – and this is likely to stay the focus of political debate in the run up to triggering Article 50. The Lib Dems have broadened this out, with their demand for a second referendum on the deal, without which Tim Farron has said they will vote against the general bill or motion triggering Article 50.

There could be a parliamentary vote on hard versus soft Brexit – if that is defined as staying in the single market – but on current party positions, the government would win that vote. If the government also needs the consent of the devolved administrations, the possibility of both delay and blockage becomes more likely.

Voting on the Brexit Deal?

Article 50 is clear that exit talks should take two years – and that these talks will set out the likely framework of a future comprehensive deal but not agree that overarching deal in the two years. What should be agreed in the two years will be issues including: budget contributions from the UK for outstanding liabilities, protection of rights of EU citizens already in the UK and of UK citizens in the EU, and relocating EU agencies currently in the UK.

It is anticipated that a transition arrangement will also be negotiated in the two years, so that the UK does not end up falling back onto WTO rules until the comprehensive EU-UK deal has been agreed.

Parliament may get to vote on the two-year exit deal once it has been agreed, as well as on the final comprehensive deal. But if parliament rejected the two-year exit deal, then the risk would be that the automatic exit clause would come into operation, once the two-year deadline is hit, and the UK will no longer be an EU member state and will have left with no deal at all – not even a transitional agreement.

The Lib Dems have said they want a new referendum on the final EU-UK deal, with the alternative to be staying in the EU. But since the UK will have left the EU before the final deal is agreed – quite likely several years later – it is unclear how this could work. If the outline framework of the comprehensive deal that the EU and UK will aim at is not very detailed, could the Lib Dems argue convincingly for membership (and then during a referendum, say 18 months into the two-year exit talks)? And what if the outline framework is only agreed a month or two before the two-year deadline?

Crucially, Labour has as yet no clear position on whether it would support a referendum on the final deal. Labour deputy leader Tom Watson has said recently that it will be considered but also that it is highly unlikely.

Unless Labour does back a second referendum on the ‘final deal’, there would be no chance of a majority for it in the House of Commons – which would, of course, require Tory rebels, and SNP votes too. How the wider public debate – given existing deep divisions – would respond to a vote to have a second referendum on the deal, if the deal was only an outline of UK-EU intentions ,is an open question, one that depends too on wider issues of the political and economic context in the UK and EU at the time.

Meanwhile, in Scotland, the Scottish government are consulting on a bill to allow a second independence referendum, and debate continues over the timing of such a referendum. For now, it seems unlikely, though not impossible, that a second referendum would be held within the Article 50 two-year negotiation period.

The real elephant in the room here is that none of the parties are calling for a second referendum on staying in the EU, irrespective of the Brexit deal. All the UK opposition parties are concerned to state that they respect the outcome of the referendum. Nicola Sturgeon too says she respects the Leave vote for England and Wales, as well as the Remain vote in Scotland. And none will yet take the step to say that they respect the result, but aim to argue to change people’s minds and then have another referendum.

For now, it looks unlikely there will be any second referendum even on the terms of the eventual comprehensive deal. The likely timing of that deal would suggest that even if there was a second referendum it would be after the UK had left the EU.

Hard Brexit Eventually?

The High Court judgement on Article 50 has, for now, brought parliament and politics back into the Brexit process. But with lack of clarity over different parties’ views on Brexit – both government and opposition – how political dynamics will affect the actual UK-EU talks and opening positions is quite unclear.

The softest possible Brexit – staying in the EU’s single market and customs union – looks unlikely. Yet depending on how some of the opposition parties’ stances develop, it cannot be ruled out that the opposition could win a vote to stay in the customs union (depending on the SNP, Lib Dems and Tory rebels). A vote to stay in the single market currently looks unlikely – this would require Labour to change its position which is not for now on the cards.

If the government is defeated, for instance on the customs union, this could well trigger a general election. What looks unlikely is that all opposition parties and Tory rebels would simply vote against triggering Article 50. Labour has said they would not do that. The Lib Dems have said they will vote against unless there is a second referendum on the EU-UK deal. Whether, as well as the Lib Dems, the SNP might vote against or abstain – and whether Labour might vote for or abstain – are all, for now, unknown. And what the SNP will do, if Holyrood does also get a vote, is also unclear.

The most likely two outcomes are that either the government bill is amended, but in ways that the government accepts, and so Article 50 is triggered, or the government does not accept some key successful opposition amendments and goes for a general election. A constitutional standoff with the devolved administrations could also be on the cards, depending on how the Supreme Court rules.

The biggest split for now in parliament, surprisingly perhaps, appears to be between the Tories and Labour on the one hand, who want some sort of bespoke deal giving good, barrier-free access to the single market, and the Lib Dems and SNP on the other, who want to stay in the single market, and in the Lib Dems case have a referendum around that. Labour’s position supporting staying in the customs union then cuts further across these differences.

A bespoke deal will lead to a hard Brexit compared to the softest option of being a big Norway. A complex deal that is outside the single market, not under the European Court of Justice, but perhaps with some budget contributions and special sector-by-sector deals may be considerably less hard though than simply operating under WTO rules. Yet, how hard it is will depend only in part on the UK’s opening position in the talks.

If parliament amends and then votes for a bespoke deal that May then takes to Brussels, how will the EU27 respond? The EU is likely to give a very tough response to attempts to engineer almost the same level of access to, and operating in, the single market that the UK currently has. In the end, a hard Brexit may be all that the EU will offer.

This article is co-published with openDemocracy.

Tobias LockKirsty Hughes
Friends of Europe

Dr Kirsty Hughes is Senior Fellow at Friends of Europe, Brussels and a writer and commentator on European and international politics and policy. She has worked for organisations including Chatham House, the Centre for European Policy Studies, Oxfam GB and the European Commission.

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