Chequers summit: The big Brexit issues that could make or break Theresa May's premiership

Getty / Oli ScarffA view of Chequers, the Prime Minister’s official country residence in Buckinghamshire, England.
  • Theresa May’s Cabinet meets today for crunch talks to try and decide what kind of Brexit the country will pursue.
  • Two years of infighting between ministers has prevented almost any progress on key issues, but time is running out and big decisions need to be made.
  • Theresa May is seeking agreement on some of the biggest Brexit issues, particularly customs, Northern Ireland, the single market, and regulatory alignment.
  • Even if Theresa May can align her Cabinet, her Brexit plans are likely to annoy Europe.
  • “It’s 12 weeks to October and the UK is still discussing options which will be dead on arrival-of course this is tiring,” one EU official told a British analyst.

LONDON – Theresa May’s divided Cabinet today assembles at her country retreat Chequers, and the stakes are high. If the prime minister gets her way, the government could finally agree upon what kind of Brexit it will pursue.

The summit, expected to last until late on Friday evening, will see the Prime Minister try to finalise the terms of the Brexit White Paper, a long-awaited document which will set out the UK’s negotiating position on its EU departure.

The body bag summit-you either sign up or you resign

The paper has been promised for many months and its publication subjected to frequent delays due to Cabinet infighting. But, with Brussels issuing their “last call” for a Brexit plan, Chequers is being billed as the point when that must all end; when ministers must finally agree upon a common position to take to Brussels.

After assembling her Cabinet in the Great Hall – and confiscating their phones to prevent the leaking that has characterised previous summits – Theresa May will tell her ministers to get behind her vision for Brexit or make the long journey back to London alone. That is why one senior minister described today’s meeting as “the body bag summit-you either sign up or you resign,” according to Eurasia Group’s Mujtaba Rahman.

And Downing Street is ready for resignations, with a Number 10 source telling Politico on Thursday evening that “taxi cards for Aston’s taxis, the local cab firm, are in the foyer for those who decide they can’t face making the right decision for the country.”

What are the crunch issues?

There are several crucial issues which need to be addressed at the summit. The first is what kind of customs relationship the UK wants with the EU after it leaves. The second is the question of the Irish border. Failure to secure an agreement on how to maintain a frictionless border between Northern Ireland and Ireland would mean the UK left without a deal in March next year. That leads to a closely related question of regulatory alignment. Put simply, how similar does the UK want to be to the EU in terms of its rules and regulations?

While such questions might sound like technical ones, they will ultimately determine the future of Britain’s relationship with the EU.

1. Customs: The “third way”?

Eight months of wrangling over post-Brexit customs options in Cabinet has produced remarkably little progress.

On the table are two broad options. The first is Maximum Facilitation, or max-fac, which would rely on new technology to track goods at borders and is favoured by Brexiteers. The second is a so-called New Customs Partnership”, which would see the UK collecting customs tariffs on behalf of the EU, and is favoured by the Prime Minister herself.

The government accepts that both models have flaws, while both are also disliked by Brussels. Theresa May is reportedly pursuing a third option which, according to reports, represents a reheated version of the New Customs Partnership.

The first question is whether May can persuade her Cabinet to swallow an arrangement many Leave-supporting ministers thought was already dead and buried. Ministers including David Davis and Boris Johnson loathe the NCP because it would keep the UK closely bound to the EU and would not represent a “clean” Brexit.

The second, more existential, question is whether May could persuade Brussels to accept a repackaged customs partnership.

In short: It looks unlikely.

“The EU has already made it perfectly clear that it is not going to let the UK act as its tariff agent free of EU law,” said Professor Anand Menon, director of the UK in a Changing Europe, a Brexit think-tank.

“There are massive practical issues.”

It would be like the Chancellor giving Iceland the power to collect tax revenue on our behalf

One person familiar with Cabinet discussions said he was “surprised” the rumoured third way appears to be so similar to the NCP, because the EU are “most opposed” to that.

“The NCP poses the fundamental question to the EU of whether to allow a third country to collect their tax revenue,” they said.

“It would be like the Chancellor giving Iceland the power to collect tax revenue on our behalf. We’d have no way of ensuring it was enforced properly.”

What is May thinking? According to Mujtaba Rahman, Europe director at Eurasia Group, May’s team hopes the UK will propose a temporary customs union then be able to include the “third way” customs proposal as an “aspirational component” of future UK-EU relations, rather than something that needs to be agreed as part of the legally binding Withdrawal Treaty.

Whether Brussels is willing to accept that proposal remains to be seen, but don’t hold your breath.

2. Northern Ireland & the single market for goods

The UK has to produce a proposal which avoids the emergence of a hard border on the island of Ireland. It is perhaps the biggest issue facing the prime minister in negotiations and one that many believe could derail the entire process.

In part, that extends to the question of customs. If Theresa May can make her favoured customs proposal fly with Brussels, that would go some way to solving the Northern Ireland question. But it would not go all the way, because she would also need to address the question of regulatory alignment, which facilitates the free flow of goods between European countries.

The UK’s scheduled departure from the European single market poses a threat to that arrangement, which in turn poses a threat to the Irish border. That is why Theresa May will reportedly try to persuade her Cabinet to seek membership of the single market for goods only.

Once again, such an arrangement is vehemently opposed by Brexiteers in Cabinet who argue that it would work against the spirit of Brexit. But May sees it as a compromise which would address the Irish question.

Once again, Brussels is ready to reject the proposal. Business Insider reported last week that Michel Barnier sees the proposal as an attempt to cherry-pick, and believes it would threaten the integrity of the single market.

May’s European counterparts are becoming increasingly frustrated.

“The UK should integrate and internalize our red lines as we have theirs, but they are not listening to us,” one EU negotiator told Mujtaba Rahman.

“It’s 12 weeks to October and the UK is still discussing options which will be dead on arrival.”

“There are going to be resignations”

David DavisCarl Court / Getty

For two years, May has been locked in an almost impossible position, trying to navigate a path between a soft Brexit which some ministers demand and a hard Brexit which other ministers demand.

At some point, she has to choose.

“Whichever way she goes, there will people in Cabinet who will be extremely disgruntled,” said Professor Menon.

Whether May calculates that Chequers is politically the right time to make that choice remains to be seen. If she does, expect fireworks.

“There is no ‘third way,'” added Menon.

“You either pursue a hard Brexit or a soft Brexit. This is about edging towards a final destination.”

“When she makes a choice, which she’s going to have to make, there are going to be resignations.”

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