In the general election campaign it was never clear in detail what the Conservative party’s Brexit policy really was. But it was clear who was in charge of it: Theresa May. Today, two weeks after the voters shattered the prime minister’s authority, the policy is even more unclear than it was before – but now no one can say who holds the reins either.
As the new parliament begins business tomorrow with a Queen’s speech very different from the one Mrs May planned in April – reports today suggested a U-turn on plans to limit free school meals, for example – her government battles to maintain surface calm. Beneath the surface, however, the battle of Brexit is under way. It is being fought out with increasing ruthlessness, amid signs that the weakened Mrs May is being pushed into a more liberal deal than the one she wanted.
The sense of a Tory party again in conflict over Europe has been heightened by events since the election. Had it not been for the Grenfell Tower tragedy, Philip Hammond would have given his Mansion House speech last Thursday, four days before the Brexit secretary David Davis headed for Brussels to begin the negotiation process with the European Union. In those circumstances, the chancellor’s economic policy-led approach would have been seen as a signal that Brexit policy had moved in a softer direction, and Mr Davis’s capitulation to EU demands about the phasing as confirming the wish for a smoother deal. Instead, Mr Hammond gave the speech today, 24 hours after Mr Davis had his first meeting in Brussels. Having previously threatened “the row of the summer”, Mr Davis was left looking silly. But the more important inference is that it is Mr Hammond, rather than Mrs May, who has the upper hand in shaping the policy now.
If so, that is a welcome shift from the unrealistic swagger of the earlier approach. Mr Hammond’s rearranged speech did not say, as he did in his interview with Andrew Marr on Sunday, that a failure to agree a deal with the EU would be “a very, very bad outcome”, but in most other respects he was emphatic that jobs and the economy are now at the heart of the UK’s approach to the EU talks. His list of conditions started with jobs, and went on to cover a comprehensive agreement on trade in goods and services, transitional arrangements to avoid any “cliff-edge” collapse in 2019, frictionless customs arrangements (with an implementation period) extending to the Irish land border, and continued migration of selected groups of workers from and to the EU.
Mr Hammond also said two important things that could be easily overlooked. The first is that EU concerns about any UK temptation to create a low-tax, low-regulation financial sector outside the EU were “genuine and reasonable”, and should be addressed by mutually compatible oversight arrangements. If implemented, this makes leaver dreams of Britain as the Singapore of Europe look even more fanciful. The second is that trade regulation in goods and services with the EU must “reflect international standards”. If implemented, this significantly constrains Liam Fox’s international trade department and takes the air out of rightwing fantasies about a new “Anglosphere” alternative to existing multilateral trade deals and alliances.
Mr Hammond’s approach, backed by the Bank of England governor, Mark Carney, is a practical improvement on the government’s unrealistic pre-election guff about Brexit. Whether it can now translate into detailed, honest deals with the EU that recognise that economic security matters more than great-power fantasy is much less certain. In his speech, Mr Hammond recognised that austerity has left Britain “weary after seven years of hard slog”. Yet the speech contained no alternative, not even – though change is rumoured – on police spending. The fact is that the Tory party is still in denial about the damage of both austerity and Brexit. Some Tories know that things must change. But rightwing obsessions still hold too much sway for this to be a serious possibility.