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Brexit Breakup

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Via Naked Capitalism

The Institute for Government has confirmed our reading, that if this Government wants a no-deal Brexit, it will be well nigh impossible to prevent it. Astonishingly, Labour and Remainer Tories let their best option, that of a general election before October 31, slip from their grasp by failing to keep Parliament in session and stuck to their traditional summer recess.

After Johnson won the premiership, his intentions for Brexit should have been seen as clear as soon as he announced his Cabinet picks. It was a Who’s Who of true believers. It was also noteworthy that he gave prominent positions to leaders of Campaign Leave, which some pundits took as a sign that Johnson was preparing for a general election, even though ever time he’s been challenged, Johnson has denied that he would call a snap election. Not that anyone thinks Johnson would be bound by his words, mind you, but Johnson’s actions sure look like he’s lashed himself to a No Deal mast.

And Johnson has taken steps since then to pre-empt measures that could block Brexit. For instance, Parliament could pass legislation to order Johnson to seek an extension. While the Government could easily thwart a stand-alone measure, it’s hard to prevent amendments from being attached to “must have” bills. However, this Government has nixed scheduling six bills that May’s Government saw as necessary to a smooth transition. The Johnson Government’s position is that the areas they cover can be handled by statutory instruments. If Johnson refuses to table other legislation in the few working days remaining before Brexit, which seems entirely possible, there aren’t other routes to intervene save a General Election, and the time to get one done before Brexit has arguably passed. From the Institute for Government’s
(the report is embedded at the end of the post):

MPs looking to make their voices heard will have far fewer opportunities to do so this time around than they had in the run-up to the end of March this year, when the former prime minister was trying to pass her withdrawal agreement. Given the limited time available, this paper reaches the following conclusions about what is likely to happen over the next few months:

• It is very unlikely the UK will be able to leave the EU with a deal on 31 October…

• MPs can express opposition to no deal but that alone will not prevent it….

• Backbenchers have very few opportunities to legislate to stop no deal: MPs may want to repeat the process that led to the ‘Cooper Act’ in March, which forced the government to seek an extension (although it had already requested an extension before the Act came into law). But as the government controls most of the time in the Commons there are limited opportunities for MPs to initiate this process, even if the Speaker helps facilitate such a move. Cancelling the planned conference recess alone will not necessarily create new opportunities.

• A vote of no confidence would not necessarily stop no deal: the process governing no confidence motions under the Fixed-term Parliaments Act 2011 has not been tested. If passed, it would trigger a 14-day period during which time MPs could try to form a ‘government of national unity’. Failing this, there will be a general election – but it is unclear what would happen if Johnson refused to follow constitutional convention to resign if an alternative majority was possible. This could risk dragging the Queen into politics.

• There is little time to hold a general election before 31 October….

• A second referendum can only happen with government support

Vlade  pointed out earlier that even though Parliament could throw the Prime Minister in Big Ben’s tower, that didn’t stop him from being the head of the government.

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Reader David in a very thoughtful comment to which I am not doing justice had stressed earlier that Brexit could test the UK’s constitution to the breaking point, and it was fragile by virtue of being so dependent on the norms fairy. PlutoniumKun flagged an article in Guardian on how the UK system relied on politicians acting “with honour” with respect to the processes of governing.  From the article, which starts with the only successful no-confidence vote which led to the fall of the Callahgan government in 1979. Author Andrew Rawnsley stresses that there was no written law requiring Callaghan to go:

When people refer to the British constitution, they are talking about a hotch-potch of such conventions, combined with ancient charters, precedents, international agreements, legislative bolt-ons and unwritten understandings. The fabric of this messy tapestry is held together by a crucial thread. That is an underlying assumption that everyone can be trusted to behave in a proper way….

What if they don’t? What happens then? We may be about to find out if Boris Johnson faces a no-confidence vote this autumn, loses, refuses to quit as prime minister and barricades himself in Number 10 for long enough to force through a no-deal Brexit before an election can take place. This is a scenario so grotesque as to be scarcely believable. That doesn’t make it an impossible one.

The suggestion that they could take this sensationally reckless course seems to have originated with Number 10’s de facto chief of staff, Dominic Cummings.

Rawnsley explains that this threat could be a big bluff, and then describes how the Fixed Terms Parliaments Act has only added to constitutional ambiguity:

If a government loses a confidence vote, the law allows 14 days for either the prime minister to regain a Commons majority or for someone else to assemble one. If no one can, there is then an election, the date of which is to some extent set at the prime minister’s discretion. The law is mute on whether Mr Johnson is entitled to hole himself up at Number 10 during that fortnight and time the election so that Britain will have crashed out of the EU before the people get to vote. Labour has called this “an abuse of power” and asked the cabinet secretary to give an opinion. Sir Mark Sedwill is thought to agree that it would be an abuse, but even if he did make that ruling, it is not clear how he could enforce it.

Please read this important piece in its entirety. For instance, it discusses the idea of forming a coalition government (supposedly) solely for the purpose of petitioning the EU to get an extension and why that won’t happen.

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In further signs of frustration and deperation, more and more pundits are discussion how a no-deal Brexit likely means the eventual break-up of the UK. Yesterday’s “Huh?” moment was Green Party leader Caroline Lucas proposing an all-woman cabinet to Save the UK from Brexit. Her idea was met with the contempt it deserved.

In the meantime, if the Twitterverse is any indicator of popular sentiment, the fact that the pound dropped to 1.06 Euro (it’s now at 1.08) is proof that Brexit is going pear shaped. Even though the Financial Times reports that the financial services industry thinks a crash-out might not be hugely disruptive and could be less costly than more delay, bankers started scrambling the morning after Brexit and were quickly applying for more licenses and looking of office space in the EU. No other sector was as fast out of the box in terms of figuring out what Brexit would mean for London-based operations and what changes they might need to make so as to keep their business (and perhaps even benefit from other firms’ flat-footedness).

Even though Richard North harrumphed that fears about food supplies are overdone because the UK will abandon import restrictions (hello, chlorinated chicken!), I wonder if his focus is too narrow. Significant parts of the UK food industry, particularly supplies to retailers, operate on a just-in-time basis. That makes them very fragile. They are vulnerable to cascading failures, an industrial version of “For the want of a nail, a shoe was lost” problem.

To list a couple of items that I am not confident have been solved, consider VAT and truckers. This is over my pay grade, but importers and exporters will now have to worry VAT withholding for both the UK and the EU. For big international companies, this issue imposes some cost and is a hassle. For small companies, that hassle may not be manageable and having more funds tied up could be fatal, particularly if they also face even a short-term revenue hit or other increases in costs due to Brexit.

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As for truckers, truckers who are UK natives with UK licenses handle meaningful amount of import and export business. They have established routes for driving with full trucks of UK goods, delivering them on the Continent, then turning around with an EU load destined for the UK.

Experts early on said UK licenses won’t be valid for commercial truck operation in the EU. The EU plans to make a short-term concession, and this is still more restrictive than the status quo. Per the Financial Times last month:

UK truckers — the lifeblood of goods trade with the EU — will be granted temporary haulage rights to ensure “basic connectivity” to help minimise disruption and queues at ports like Calais. The measures will stay in place until the end of 2019 but restrict UK lorries to limited deliveries in the EU.

“Basic connectivity” sounds stingy by design.

Needless to say, many people are not reassured:

And why should they be? Civil service ranks have been hollowed out, and the young ‘uns on the whole are much less impressive than the old hands. The big reason to anticipate that a crash-out will be a train wreck is that the UK lacks the institutional capacity even to identify all the things it would need to do to mitigate the most severe damage, let alone plan and execute to avoid that. Yes, it will avoid worst outcomes in some areas. Yes, in others, it may have some initial apparent successes that erode as they are not adequate to the continuing increased volume of post-Brexit activity and complexity.

British citizens could stand take some lessons from Hong Kong, but even if they did, that too would be too late. They’d need to be out on the streets in force now to have any chance of cowing Johnson.

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