Things seem to just get worse for Prime Minister Theresa May as two senior ministers and one junior minister from her cabinet have resigned in a short span of two days, after the Chequers Summit. The first blow came on Sunday, when UK's Minister-in-charge of Brexit negotiations, David Davis resigned less than nine months before the United Kingdom is due to leave the European Union. The move came just 48 hours after May had secured approval from her cabinet to negotiate a “business friendly” deal to leave the EU.
The Secretary of State for Exiting the EU said in his resignation letter that he did not want to be a
reluctant conscript” and that he thought the plan approved last Friday “is certainly not returning control of our laws in any real sense.” May responded to the resignation saying she was “sorry” he had chosen to resign and argued her proposal was “consistent with the mandate of the referendum”. Junior Brexit Ministers Steve Baker resigned just shortly after Davis left.
May's cabinet was hit for the worse again, when Foreign Secretary Boris Johnson quit on Monday over the Chequers agreement. Just a day after he confirmed a meeting for crisis talks at his official residence in central London, he decided to walk from his job. The two major resignations have left May severely hit at the top of a government unable to unite over Britain's biggest foreign and trading policy shift in almost half a century. May was quick to appoint Jeremy Hunt as the new Foreign Secretary, following Boris Johnson's resignation from the job amid deep divisions over Britain's departure from the European Union (EU) or Brexit. The reformed Cabinet met on Tuesday motning.
Chequers Summit: More misses than hits
In what has been touted as Prime Minister May's most dramatic face-off with her senior team, at least since the last one, the Chequers Summit saw May push for a Brexit so soft, you could practically see her red lines bend to the point of breaking. Two years after a majority vote to leave the European Union, May confronted Brexiters, and their self-cooked fantasies, unveiling a compromise plan with an outcome that will minimise damage to the British Economy.
The government confirmed it would end free movement of people, albeit with the possibility of a new generous labour scheme with Europe. The proposals affirmed at the PM's country residence are inferior to the UK's current relationship with the EU. However, they allow Brexit to proceed while protecting some vital economic interests. The initial document however, fudges important policy issues. The government published its Chequers agreement detailing its latest Brexit negotiating stance, supposedly with the entire Cabinet's support. The proposal involved staying aligned with the EU on goods, however, allowing for more wriggle-room on services.
May's government has proposed a “free trade area for goods” which has the benefit of avoiding friction at the Irish border. This would be based on a “common rulebook for all goods including agri-food, with the UK making an upfront choice to commit by treaty to ongoing harmonisation with EU rules”. However, it would only cover “those necessary to provide for frictionless trade at the border.” The UK wants to retain the right to diverge from EU rules “recognising that this would have consequences”.
The government plans to strike a separate deal with “regulatory flexibility” where required. However, the proposal admits this means the “UK and the EU will not have current levels of access to each other's markets.” Also, under current proposals, the UK will commit to putting together a common rulebook on state aid and establish “cooperative arrangements between regulators on competition.” Both sides would also agree to maintain high regulatory standards for the environment, climate change, social and employment, and consumer rights.
Several questions unanswered
The three pages long document however, failed to answer several major questions. For example, who can cross borders and how? Neither membership of a customs union, nor a “combined customs territory” as proposed in the Chequers paper would necessarily prevent backlogs at borders. Another important question is the VAT. One of the most demanding areas for customs checks and a major source of fraud, the EU is standardising Value Added Tax (VAT) at 15pc. The Chequers paper have failed to make any mention on the topic. While Brussels regards Norway as a trustworthy when it comes to paying duties, the EU fraud watchdog stated that UK customs are so weak they are a magnet for fraudsters.
Failing to finalise a deal on VAT would mean that UK firms might not be able to claim tax refunds from other EU countries via online portals and will have to pay the tax upfront at the border. Britain's key industry, financial services barely gets a mention in the plan. The document acknowledges the “UK and the EU will not have current levels of access to each other's markets” as “passporting”, allowing a bank licensed in one EU nation to access all the others, will no longer apply.
The aim is to reach “arrangements on financial services that preserve the mutual benefits of integrated markets and protect financial stability”.
Cross-party reactions
Conservative party's Lord Jitesh Gadhia, speaking to Asian Voice said, “Delivering Brexit is massively complicated because there are many versions of how we can leave the EU - and different consequences of each option. Brexit involves untangling over 40 years of deeply integrated and intertwined structures and processes with the EU. So it is important to listen to the voice of business in achieving an outcome in the national economic interest.
“I have huge sympathy for the Prime Minister in trying to navigate the best course for the country as we leave the EU. She is attempting to reconcile all the conflicting concerns and constraints from both sides of the Brexit debate. It is a near impossible task because of the trade-offs involved. If there was an easy solution then we would have found it by now.
“Whilst it is important for the topic of customs and the free and easy movement of goods to be thrashed out – let’s also remember that 80% of the UK’s GDP comes from services. It is therefore non-tariff barriers and market access issues that are much more important for these sectors.
“All the evidence shows that financial and professional services are at the heart of the success of the British Asian communities in UK. A staggering 32% of Indians work in professional industries compared to an average of 20% across the population. We provide the human capital engine for large parts of the economy. These sectors have also provided a powerful engine for social mobility because they are rooted in meritocracy. Any Brexit deal must therefore cover trading in services as well as goods.”
Lord Navnit Dholakia, Deputy leader of the Liberal Democrat Party said, “Theresa May has had almost two years to put together a coherent proposal for the future of our country and has failed to do so. There is an internecine warfare in her Cabinet.The Brexit Secretary David Davis has resigned and is followed by the Foreign Secretary Boris Johnson.Three other junior Ministers have also gone.This is like the proverbial bus wait.You wait ages for one and five turn up at the same time. So what has all this rumpus in the Tory Party all about.
“Well, you have got to go back to the days of John Major to understand the conflict about our membership of the European Union. A live microphone picked up the comments about “bastards”who were challenging our Union with Europe.This continued during the leaderships of Michael Howard, William Hague and Iain Duncan Smith. When Cameron took charge, he promised a referendum to finally resolve the issue. That was his biggest mistake.He failed in the worst run referendum campaign and the country has paid a heavy price since then.
“Well, Boris Johnson is no loss as a Foreign Secretary. Having lost his arguments he now confirms that the dream of Brexiteers is dying. He is not wrong. I am happy that this is so. Britain cannot survive as a Little Englander in a global economy. Brexit was a dummy sold to electors at the referendum.
“Theresa May’s proposals can hardly be described as a soft Brexit given the damage due to be caused to the economy by taking the UK out of the Customs Union and single market. The fudged compromise is already proving unworkable. We should hope that the Government so badly divided will go back to British people to ask them if they want an exit from this chaotic Conservative Brexit.
“The worse is still to come. The Conservative fudge will satisfy nobody-leavers,remainers,business or the EU.It leaves the UK a rule taker on goods and agricultural produce,puts the UK service sector at great risk and could fall foul of the EU’s no cherry pickings and deliverability rules. The country is almost at a stand still and we are paying a heavy price to resolve the conflict in the Tory Party.”
Labour party's Seema Malhotra MP, Shadow Chief Secretary to the Treasury said, “This looks like sticking plaster to hold together a divided Cabinet, not the plan for jobs and the economy that Britain needs and the fall out in the Tory Party has left May weakened. The proposals stop well short of the comprehensive customs union we need. And I’m staggered that the Government still has no meaningful plan to protect our services which form 80% of our economy. We urgently need more detailed proposals brought forward.
“May could have handled the last two years so differently. But it is finally a moment when she is taking a stand against the hard Brexiteers who have been caught out with no real plan of their own. There is almost universal consensus that their desired no deal would be hugely damaging for our country.
“It is clear we are running out of time and that any form of Brexit is now set to leave us worse off. Theresa May’s own frontbencher admitted at the weekend that the Chequers proposals will leave us with less access to markets than we have now. We don’t know how much less, or how much people and businesses will pay the proposed new complex customs arrangement. People voted to come out, they didn’t vote to lose out and this is an admission that we will do so.”
