Grayling Network Insight: From our Office in Edinburgh
Brexit concerns continue to stack up on the northern side of Hadrian’s Wall
Last week, the EU Withdrawal Bill won its first Commons vote – the first step in the legislative process of taking the UK out of the EU. Whilst the Brexit process is primarily a matter for Westminster, the consent of the devolved administrations, Scotland and Wales, is still sought. As part of the repeal, many powers that are currently reserved to the EU will be devolved to the Scottish Parliament and Welsh Assembly. However, a dearth of detail on what these powers will look like has put the Scottish Government on the offensive.
After an initial attempt to use Brexit as justification for a second independence referendum met heavy resistance, Scottish First Minister Nicola Sturgeon has re-focused her attention on ensuring the maximum number of powers are devolved following Brexit. Unified by their displeasure of May’s £1bn deal with the Northern Irish Democratic Unionist Party (DUP), Sturgeon has joined forces with Welsh First Minister Carwyn Jones to present a united front in support of further devolution, with both accusing the UK Government of attempting a “power grab”.
In a joint letter to Theresa May, the First Ministers set out their 38 proposed amendments to the EU Withdrawal Bill – threatening to withhold legislative consent if the bill is not “substantially amended”. The Scottish Government also took the step of publishing a list of 111 powers it believes are in danger of remaining at Westminster, which they want to see devolved immediately. The current proposal in the Bill is that powers which are not reserved but which are exercised in Brussels, such as farming and fishing laws, will be repatriated to Westminster, before a decision is taken over which powers should be devolved.
Despite pressure from the devolved administrations, May has remained resolute over the issue, and talks between the UK and Scottish Government in August over the repatriation of powers ended in stalemate. In response to the demands from Edinburgh and Cardiff, the UK Government has stressed that the devolved administrations will receive more powers, whilst avoiding any specifics over what these powers will be. Painted by opponents as the beginning of the power grab, the UK Government contends that they are simply seeking to protect the internal UK market and avoid creating differentiated regulations in areas where a common UK approach would be more efficient.
The Grayling view
Whilst the Scottish Government has little direct control over the Brexit process, it is eager to appear to the Scottish electorate, which voted 62% for Remain, that it is engaged in the process. To this end, Sturgeon has been successful at leveraging what little influence she has. By building a coalition with the (Labour-run) Welsh Government she has elevated her negotiating position above party interest, making the issue about the principle of devolution. Legally, Westminster does not need legislative consent from either the Scottish or Welsh Parliaments for the Withdrawal Bill, but to proceed without it would feed perfectly into the narrative of a UK Government that is happy to steamroller the democratic will of the people of Scotland.
Aware that such a move would stoke nationalist sentiment, May is unlikely to adopt this hard-line approach – eager to avoid a devolution dispute when the fate of her Withdrawal Bill is far from guaranteed. With the opening positions for the negotiations well-established on both sides, expect to see a more constructive approach to negotiations moving forward. Indeed, the most recent debate on Brexit in Edinburgh was the most civil to date, and the Scottish Conservatives have since agreed to review the Scottish Government’s amendments to see if there is anything that they can support. Common ground is unlikely to be found on all issues, but the move perhaps signals a desire to take the negotiations beyond rhetoric and towards an agreement that would see the Scottish Government support a legislative consent motion. However, questions remain over whether the intervention by the Scottish Conservatives is a deliberate step towards reconciliation by May, or is simply a delegation of responsibility borne out of indifference to the negotiations, which represent little more than a distraction to the PM. The outcome of the next round of talks between the Scottish and UK Governments will be revealing. Concessions from both sides would represent significant progress, but further entrenchment is certainly not out of the question.
The highlights from the UK:
Will all’s well end well in Florence?
It has been a week of power plays and speculation, with resignations and the threat of resignations, briefings and counter briefings – all of which played out across the front pages of the media.
The week began with speculation on May’s speech. Everything from the choice of scenery to the length of the speech was forensically analysed. Despite announcing the speech just under a fortnight ago, it is has reportedly been redrafted numerous times.
Ollie Robbins then made news on Tuesday with a move from the Department for Exiting the European to the Cabinet Office. Four reasons have been persistently proffered for his change of department. First, there were reports that Robbins and Brexit Secretary David Davis were clashing in style and desired outcome. This view was given fuel by rumours that there were two versions of May’s Florence speech going round Whitehall – one supported by Robbins which would include some acceptance of transition or payment to the EU and one supported by Davis without such a payment. Second, there is a growing recognition of the need for different government departments’ Brexit work to be more closely joined up. As the central hub of Government, the Cabinet Office would allow Robbins to do this. Third, Robbins was reportedly struggling to carry out the day to day business of running a government department whilst also leading the negotiations. This move allows him to focus his entire attention on the latter. Fourth, this move should enable May to run the Brexit negotiations more effectively from No 10 and is being seen as indicative of a reduction in the Department for Exiting the European Union’s power. This perception has been heightened by the departure of the Brexit Department’s Director of Trade and Partnerships, Antony Phillipson.
If there hadn’t been enough action, the Conservative leadership soap opera also made an appearance throughout the week. Foreign Secretary Boris Johnson, the long-term Conservative members’ favourite to lead the party, wrote a lengthy piece for The Telegraph which set out his vision for the UK’s post-Brexit future which probably wasn’t wholly reflective of May’s policy. This triggered a week of rows and speculation as to whether Johnson would be fired or would quit. He was accused of “back-seat driving” by Home Secretary Amber Rudd, the head of the UK Statistics Authority took to twitter to dismiss Boris’ £350 million for the NHS claim as a “clear misuse of official statistics”, whilst Michael Gove jumped to the defence of the man whose leadership bid he torpedoed just over a year ago.
The Grayling View
Although Johnson’s ability to drive the media narrative can be interpreted as a sign that May’s leadership is weak, the past few days have actually seen her re-consolidate some of the power lost in the wake of the June election. By ensuring that Robbins reports directly to her rather than Davis, May has again taken more direct control of the Brexit negotiations. With today's Florence speech seeing her commit to transition and some form of monetary contribution to the EU, this signals that May, Rudd and Chancellor Philip Hammond’s vision for Brexit is prevailing rather than that of the Brexiteer trio of Johnson, Gove and Trade Secretary Liam Fox. However, the Florence speech only expected to set out the UK’s ambitions up to 2021. With various reports that the Cabinet is yet to decide on a negotiating stance for long-term UK/EU relations there are still numerous opportunities for business and organisations to shape the UK’s future policy objectives.
The highlights from the Member States:
Austrian election mainly focuses on domestic concerns
The Austrian political situation is currently very influenced by the campaigning for the parliamentary elections on 15 October. The early elections were called by the conservative ÖVP and marked the end of the 13th coalition government between the OVP and the social democrats (SPO) since WW2. As we have seen in so many other elections in Europe, the main topics on the Austrian campaign trail are migration and state security. Brexit and the future of the European Union – beyond tackling the refugee crisis – are only marginally considered.
On 13 September Grayling Austria held a Brexit Breakfast Briefing which featured contributions from Yvonne Toncic-Sorinj, Director for General EU Matters and EU Institutions in the Austrian Ministry for Europe, and the British Ambassador to Austria Leigh Turner. Whilst Ambassador Turner stated that the Brexit referendum has not led to the economic catastrophe predicted by many beforehand, Ms.Toncic-Sorinj caveated this by stating that it is unlikely that any positive economic outcomes can be expected from Brexit. Overall the panelists which included the CEO of Grayling Brussels and Chairman of PA for Continental Europe, Russell Patten, agreed that Brexit represents a profound opportunity to assess how to move forward with European integration.
The Grayling View
Pre-election periods are often wait-and-see moments, which is particularly true for this Austrian election because all signs point towards a major shift in the political landscape. However, Austrian companies should not miss the opportunity to voice their positions regarding Brexit to those negotiating on behalf of Austria. While UK investments in Austria currently amount to €4.6 billion, Austrian companies invest €7 billion in Britain – so the UK is a very important market for the alpine republic.
Dates for your diary
24 September 2017 - German Federal elections
25 September 2017 - Fourth Negotiating Round
28 September 2017 - GBU Seminar - 'The Weakest Link? Brexit and your Supply Chain'
w/c 9 October 2017 - Fifth Negotiating Round
11 October 2017 - GBU Brexit Breakfast Club
8 November 2017 - GBU Brexit Breakfast Club
19-20 October - European Council Summit - Sufficient Progress Checkpoint
14-15 December - European Council Summit
1 January 2018 - Bulgarian Presidency of the Council
1 July 2018 - Austrian Presidency of the Council
End of October 2018 - Negotiations expected to end
Autumn 2018 - Spring 2019 - Possible Scottish independence referendum
1 January 2019 - Romanian Presidency of the Council
March 2019 - UK expected to leave EU
Grayling Brexit Unit
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