A guide to Brexit, part 5: What is the likely outcome of Brexit?

By on 30/06/2016
A guide to Brexit, part 5: What is the likely outcome of Brexit?
A guide to Brexit, part 5: What is the likely outcome of Brexit?

This is part 5 of our guide to Brexit, scoping out how exit talks might develop and considering their most likely conclusions. We also take a look at the Brexit vote’s implications for Scotland and its governing party’s long battle for independence.

Part 1 examines events leading up to the referendum result; part 2 explores the referendum’s immediate aftermath and the process for negotiating a British exit; part 3 considers who’s likely to manage the UK’s departure; and part 4 asks whether Brexit could be averted.

A shake-down in the civil service?

With the new Tory leader in place, we may well see some changes within the UK civil service. Michael Gove in particular has a terrible relationship with many civil servants – one that will not have been improved by the Leave campaign’s accusations of bias against Bank of England and Treasury officials.

During Gove’s time as education secretary, his permanent secretary and four directors general quit in rapid succession – abandoning a ship taken over by controversial special adviser Dominic Cummings, who played a key role in managing the Leave campaign and would be likely to rejoin a prime minister Gove at the heart of government.

Gove is a ‘small government’ radical who dramatically shrank his department during his time as education secretary; and cabinet secretary Sir Jeremy Heywood has repeatedly been the subject of hostile press briefings believed by many to emanate from Gove’s camp. If Gove gets the top job, Heywood – who became cabinet secretary in 2012 – would find his legendary ability to work with politicians from across the political scale tested to the very limit.

If a Brexit candidate does win the crown, they’ll have to set about smoothing relationships with officials. “There were pointed criticisms about the role of the civil service in a referendum,” recalls Dave Penman, general secretary of civil service managers’ union the FDA. “We’re probably going to have Brexit ministers in key departments, with the potential to think that the civil service didn’t act correctly. So there’s a big issue around rebuilding trust.”

Former Treasury Solicitor Sir Paul Jenkins agrees – but ex-cabinet secretary Lord Turnbull is reassuring: “The Treasury did what it always does: work for the government of the day,” he says, adding that the next government “haven’t got any other apparatus to use, and the civil service is very good at turning on a sixpence. They’re paid to get you out of a crisis, and that’s what they’ll do.”

Sir Paul Jenkins was the UK Government's most senior legal official and Permanent Secretary to the Attorney General from 2006 to 2014

Sir Paul Jenkins was the UK Government’s most senior legal official, as Treasury Solicitor from 2006 to 2014

One other challenge will face a mid-Brexit civil service, Jenkins adds: polishing its recruitment offer to high-flying graduates and technical specialists. “If you look at the demographics of the vote, which shows that young people think [Brexit] is mad, is the civil service going to have trouble attracting the brightest and best?” he worries. “They’ll know that for the first few years they’ll be doing something negative – undoing something. Most people don’t see this as creating a great new Britain; they see it as shrinking our place in the world.”

Can red lines block migration?

Any such problems, though, will come through slowly. Much more pressing will be the need to serve the new Tory leader – who will themselves face great pressure to get on with the job of taking Britain out of the EU.

That new leader will not have been selected without committing to go through with Brexit (see part 3) – and, given the pressure from their electorate of Conservative Party MPs and members, they are also likely to have limited their freedom of action by making promises on the Leave campaign’s most cherished goals.

In particular, many members will be attracted towards those pledging to cap immigration; contender Stephen Crabb has already begun doing so, commenting that “the British people want control of immigration… For us, this is a red line.” It is, though, possible that Michael Gove has the Brexit credentials to win Leave supporters’ backing without making firm pledges on immigration – particularly given his appeal to the neo-liberal and business ends of the Conservative membership.

Importantly, the more that leadership candidates promise Tory members on the topic of immigration, the less they’ll be able to get out of the EU in terms of access to the single market – for EU leaders have made it abundantly clear that in order to get past the bloc’s external tariffs and trade barriers, countries must accept freedom of movement. This has been obvious for years: non-member Norway has had to trade free movement of labour for access to the single market, whilst Switzerland’s recent referendum result requiring caps on migration has put its own access at risk.

Whilst Brexiteers argued that the French and Germans’ desire to export goods to Britain will force them to give ground on the migration front, this position ignores the interests and influence of smaller countries. Nations such as Poland and Slovakia export few goods but many workers to Britain – and given the ‘super majority’ required to approve a British exit treaty, coalitions of small countries could block any trade deal. On this – as on so much – the Vote Leave campaign took a position that stood somewhere between deliberately misleading and wilfully blind to awkward facts.

From cannonades to compromise

Lord Turnbull, the UK’s cabinet secretary between 2002 and 2005, explains that in negotiating with the EU on migration and trade, “you can get one, but not the other.” The Norwegian model, he adds, “doesn’t meet our requirements on movement of people, and compared to where we are now looks a very poor buy: we’d get no extra trade, accept free movement and pay into the budget.” The question, he concludes is: “Can we now find some kind of trading arrangement with a migration arrangement that’s a better balance than now?”

This points to a bespoke trade deal, perhaps linked to a set of EU reforms set in motion by the shock of Britain’s referendum vote. “The EU itself has a problem,” former cabinet secretary Lord O’Donnell told Radio 4 this week. “The euro area needs to integrate further politically, but there’s an opportunity for those outside it to create a future a bit like the European Economic Area.”

This future, though, would only be a little like the EEA – for the EU would have to break its own rules around access to the single market. There’s a “small possibility that, when the 27 have calmed down, they might try a reform package and offer us a chance to remain,” says a top former civil servant. But this couldn’t come through quickly, and would presumably involve a change to permit reversal of the Article 50 declaration. “We won’t hear the real EU mood music until after the French elections,” the former official comments. “They can’t let the French think that escape isn’t too grim. After that – and assuming it’s not President le Pen – then we might see a bit of flex.”

This brings us back to the Norway model, which would return control of fisheries and agriculture but require freedom of movement: another top former civil servant points to the potential for an “EEA-type deal which pisses off the anti-immigrants but saves the economy.” This outcome, whilst complying with the popular mandate to leave the EU itself, would require the next PM to risk the wrath of Brexiteers fixated on immigration numbers – resuscitating the UKIP threat to the Tory vote.

Short-term drama, long-term pain

They might, however, think it worth the risk – for as time goes on, we’ll begin to see past the immediate financial shock of the referendum result and catch a glimpse of the longer-term risks to the UK economy outside the single market. “I don’t think exports are the weak spot,” comments Turnbull. “The weak spot is inward investment – and that will come through very slowly. Take the next Nissan car plant: a lower exchange rate would increase our chances of getting it, and if there are very few tariff barriers we would be competitive. So that trade deal becomes very important.”

We will also, Turnbull adds, start to see how expanding our sovereignty does not necessarily increase our control over immigration. Although the French president has offered reassurances about the ‘le Touquet’ treaty, under which UK border controls are based in Calais and Paris, both Jenkins and Turnbull fear that it won’t survive a Brexit. “The French will buy [migrants] a ticket and put them on the train, and the refugee camps will open up at Folkestone,” comments Turnbull. “That’s the difference between control and sovereignty.”

“You have to decide in each area whether it’s worth conceding a bit of sovereignty in order to get a bit of control,” he adds, suggesting that “our control over the non-European element of immigration will get worse [following Brexit], because at the moment the Continental part of the EU is acting like a huge sponge and absorbing all kinds of migrants.” In future, EU nations may have far less interest in helping the UK on immigration – and international issues can only be addressed by international action.

Lord Turnbull was head of the UK civil service and cabinet secretary between 2002 and 2005 before being succeeded by Gus O'Donnell

Lord Turnbull was head of the UK civil service and cabinet secretary between 2002 and 2005 before being succeeded by Gus O’Donnell

The landing zone

The next prime minister will have to walk a careful line between the Brexiteers’ hostility to immigration, and the economy’s need for migrants; between the domestic pressures acting on EU leaders, and the mandate won by Leave voters; between the UK’s expressed desire for control over its destiny, and the modern world’s demand for global collaboration. That path will probably lead them through the Article 50 process to a future outside the EU – either in a ‘Norway-plus’ model that satisfies no one but safeguards the economy, or via a bespoke UK-EU trade treaty that places both tariffs and immigration controls between Britain and the Continent.

Neither of these options were the ones championed by the Brexit campaign, and nor would they satisfy the British electorates’ expectations of both strong economic growth and shrinking immigration. But this is where we are – brought here by a decades-long Eurosceptic drumbeat and David Cameron’s quest for electoral advantage.

He is not alone: across the Atlantic, the US Republicans have similarly become victims of their own rhetoric. Seeking to capture voters amongst the Tea Party’s small-government activists, the Republicans painted themselves as opponents of government itself – until they were captured by the ultimate Tea Party pin-up, Donald Trump. In Britain, Cameron faced his own Tea Party in the shape of UKIP – and in a bid to neutralise the threat of Farage, took a gamble that saw his own government replaced by one built around our own version of small government, anti-establishment ideology: Euroscepticism.

Change creates opportunities

If there’s a silver lining, says Dave Penman, it’s the referendum’s potential to catalyse a new connection between politicians and the people. “I genuinely believe that the political class has had a fright,” he says. “The motivations behind this vote have come as a shock, and there is a possibility that – after two decades of [rebelling Brexit voters] not being listened to or understood – the parties might start listening and there may be a recalibration around politics. At least for the Labour Party: without this shock, would it have understood the threat or would it have suffered a death of a thousand cuts?”

Looking at today’s Labour Party, it does not appear poised to reconnect with its traditional, working class heartlands. But sometimes chaos is the best seedbed for genuine change. Perhaps even the Conservative Party, as it grapples with the instability it’s created and the realities surrounding its long-held dream of leaving the EU, will develop a more mature approach to Britain’s relationships with our Continental neighbours.

“The Leave campaign has created permanent damage to our relationships [with EU members]; you can’t say that you want the same relationship with your wife after you’ve divorced her,” comments Penman. “If we want the right deal now, we’ll have to understand that our place is not that of a former empire. If we’re going to be a modern country in a globalised world, we need to work with our partners.”

The European project, he adds, is about “cooperation; working for mutual benefit; understanding the interests of our partners.” Ironically enough, if the UK wants to find a happy home outside the EU, then it will have to start managing its international relationships in a far more European way.

During the campaign, Brexiteers insisted that even outside the EU, Britain would  remain – in our culture, our relationships and our trading networks – very much a part of Europe. That is certainly possible – but if Britain wants that to be the case, its leaders had better start acting like it. And fast.

 

What this means for Scotland

Scotland's first minister, Nicola Sturgeon

Scotland’s first minister, Nicola Sturgeon

The UK’s Brexit vote has once again raised the question of Scottish independence – though in truth, it never really went away following the September 2014 independence referendum, won by David Cameron’s unionists after a hard-fought campaign.

Had Cameron known the outcomes of the Scottish poll before he promised a Brexit referendum the following year, he surely would never have made that pledge. For though the Scottish National Party – then led by Alex Salmond – lost that vote, the campaign dramatically boosted the SNP’s networks, profile and organisational capabilities. In the 2015 general election the SNP swept all before it, wiping out Labour and the Liberal Democrats in Scotland; and earlier this year, they confirmed their hold on Holyrood’s devolved Scottish Government.

The SNP’s resurgence helped Cameron out in the general election, robbing Labour of dozens of Westminster seats. But the lesson of the Scottish referendum is an uncomfortable one for both Labour and the Tories: having won its own referendum, UKIP – despite having ostensibly lost its raison d’etre with its Brexit victory – could be poised to break out of its council and European Parliament strongholds to make serious gains in the House of Commons.

This isn’t a problem for Nicola Sturgeon, who asked her voters to back Remain – and secured 62% support, against a UK-wide average of 48%. Highlighting the injustice of Scotland being removed from the EU against its will, and pointing to the SNP’s 2016 Holyrood manifesto – which called for a new independence poll if the country’s circumstances changed – many Scottish nationalists are now fired up to demand a new independence referendum.

This could not, however, permit Scotland to retain its place in the EU as the rest of the UK heads off into the Atlantic. For the membership belongs to the UK, not its constituent nations; and the Article 50 timescale is far too short for Scotland to win its independence before Brexit is likely to be finalised. Anyway, those EU nations with their own would-be breakaway provinces are none too keen to see the union welcoming in a newly-independent Scotland: Spain in particular has already made clear its inflexibility on this issue, and French president Hollande has noted that Brexit talks “will be conducted with the United Kingdom, not with a part of the United Kingdom.”

Scotland could instead exit with the UK, then rejoin following an SNP victory in a new independence referendum – presumably, as a new member, joining the euro and the Schengen area. But Sturgeon is a wilier and less gung-ho operator than her predecessor, and likely to play a longer game. Since the SNP lost the last independence referendum – in part due to worries about the country’s economic sustainability – the oil price has collapsed by more than half, slashing revenue from its depleted North Sea oil reserves.

Sturgeon also faces a new and potent Opposition in the shape of Tory leader Ruth Davidson – a Remain campaigner and committed unionist. And as a new member, Scotland would be expected to join the euro and the Schengen border-free area: the prospects of building border posts to prevent EU citizens from entering a post-Brexit rump UK, and of joining a shaky currency in constant need of cash injections, are unlikely to win over many voters.

So Sturgeon is unlikely to push for a new independence referendum any time soon: she knows that if the SNP lost a second, it would be game over for the foreseeable future. Meanwhile, any sensible new Tory administration will stuff the SNP’s mouth with gold over the Brexit issue, making up lost EU funding and Common Agricultural Policy subsidies and offering its fishermen generous new catch limits.

There is, however, one further option for Scotland. The territories of several European nations are split between EU and non-EU areas; indeed, the UK’s Isle of Man is not part of the EU. Could Scotland remain within both the EU and the UK, even as the rest of the UK heads for the exit?

Sturgeon is certainly exploring this option with EU leaders – many of whom will find it attractive. Set against the PR disaster of the UK’s exit, retaining Scotland within the EU would be a big gesture of faith in the bloc’s future – offering a morale boost and countering the narrative of decline.

Not all EU nations would welcome the idea, however, and neither the EU’s nor the UK’s negotiation teams would welcome the huge additional complexity that would accompany three-way talks. So the idea still looks a long shot.

Sturgeon is, of course, talking it up; but the reality is that this is probably still a plan B. In the long term, the UK’s departure from the EU is likely to add support for Scottish independence – and Sturgeon is a long-term strategist. If only the UK prime minister had those skills, we might be in a very different place now.

 

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See also:

A guide to Brexit, part 1: how Britain voted to leave the EU

A guide to Brexit, part 2: What’s the process for negotiating a British exit from the EU?

A guide to Brexit, part 3: Who’ll run the negotiations?

A guide to Brexit, part 4: Is Britain’s departure from the EU inevitable?

Is the EU referendum result a wake-up call for employers?

Olly Robbins appointed head of government’s new Brexit unit

Oliver Letwin ‘completely unsuitable’ to lead Brexit unit, says former cabinet secretary

Brexit will be ‘largest legal, legislative and bureaucratic project in British history’, says former UK Treasury Solicitor

Clash over civil service advice in EU referendum

Bank of England’s independence under threat in EU referendum row

EU issues Poland with official warning over constitutional court changes

Sir Paul Jenkins, former UK Treasury Solicitor: EU Referendum interview

Managing the EU Migration Crisis

European Parliament orders Poland’s government to reverse changes to country’s top court

A family reunification dilemma for the EU

About Matt Ross

Matt is a journalist and editor specialising in public services, policymaking, government and management. He was the editor of trade title Civil Service World from 2008 to 2014, serving an audience of senior UK officials; and the features editor of weekly news magazine Regeneration & Renewal between 2002 and 2008, covering urban regeneration, economic growth and community development. He has also been a motoring and travel journalist, and now combines his role as editorial director of Global Government Forum with writing for other publications including The Guardian and Planning magazine.

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