June Brexit Briefing

  • Insight

26 June 2017

The political upheaval of the General Election has had and will continue to have consequences for the Brexit negotiations.

This briefing provides a summary of some of the legal issues resulting from the General Election result and the potential implications for negotiations between the UK and the remaining EU member states within the timescale for a Brexit deal to be agreed.

Following the UK General Election on Thursday 8 June 2017, the Conservative Party was returned as the largest party in the UK Parliament, but it fell short of obtaining an overall majority. In this now hung Parliament, the Conservatives have reached a ‘confidence and supply’ deal with the Democratic Unionist Party (“DUP”). The result of the General Election raises significant uncertainties, particularly over the timetable and approach to Brexit negotiations, which commenced on 19 June 2017.

Results

The turnout in the General Election was 68.7% of the electorate. The results were:

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Hung Parliament and a deal with the DUP

In the event of a hung Parliament, the Government in power before the General Election (in this case the Conservatives) gets the first chance at forming a new Government. In order to form a Government, a party must be able to command a majority in the House of Commons on votes of confidence and supply. In order to do this, the party with the most seats essentially has three options:

  • enter into a formal coalition agreement with other political parties represented in Parliament, which can involve certain agreements on policies and holding of Ministerial office (as happened with the Conservatives and the Liberal Democrats in 2010);
  • form a ‘confidence and supply’ deal - typically this is a deal where the supporting party or parties agree to back the Government on (1) explicit confidence votes and (2) votes on budgets and supply (government spending). In return, the supporting parties are given Government support for specific policy priorities;
  • govern alone as a minority Government - in this case the Government will need to seek the support of MPs from other parties in order to pass any legislation, on a case-by-case basis.

The Conservative Party now holds 317 seats and the other parties combined hold 332 (excluding the Speaker who is considered to be an Independent). However, of this number, the seven Sinn Féin MPs do not take their seats, so this means that there actually are 325 non-Conservative MPs in the Parliament.

Prime Minister Theresa May indicated that she has no intention of resigning as Prime Minister and entered into talks with the DUP, to discuss a deal whereby the DUP (with 10 MPs) would support a minority Conservative Government. Media reports indicated that such an agreement was likely, with the DUP seeking funding for Northern Ireland across a range of areas, including health, education and investment in infrastructure in exchange for keeping the Conservative Government in power. As well as concerns about the political views of the DUP in many political quarters, there are also concerns about the impact a deal with the DUP would have on the UK Government’s position in relation to Northern Ireland and the Good Friday Agreement.

The terms of that proposed deal were announced on 26 June 2017. The full text of the agreement can be found here. The DUP will back the Conservative party in key votes in the House of Commons, beginning with the vote on the Queen’s Speech in exchange for agreement on certain policy issues and £2.5 billion of financial support. In summary:

  • The DUP has agreed to support the Government on all motions of confidence, and on the Queen’s speech, the Budget, finance bills, money bills, supply and appropriation legislation and Estimates.
  • The DUP also agreed to support the Government on legislation pertaining to the UK’s exit from the EU and legislation pertaining to national security. Support on other matters will be agreed on a case by case basis.
  • In exchange, the UK Government has agreed that there will be no change to the Pensions Triple Lock and the universal nature of the Winter Fuel Payment. They have also agreed to spending 2% of GDP on the armed forces and commited the same cash total in funds for farm support.

The agreement also covers the devolved government in Northern Ireland; and the UK Government has agreed additional support for Northern Ireland set out in an annex to the Agreement, which can be found here. The UK Government has committed £2.5 billon of financial support over the next two years. The UK Government will support economy and infrastructure, health and education and legacy bodies to provide support better outcomes for victims and survivors of the troubles.

The Queen's Speech

The Queen’s Speech and State Opening of Parliament took place on Wednesday 21 June.

Ordinarily, the Queen’s Speech is used to outline the main policies and priorities of the incoming Government. The full speech can be read here and further details about the proposed bills can be found here. As expected, this year’s speech was dominated by the UK’s future withdrawal from the EU, with eight of the proposed 27 Bills relating to Brexit. The Queen’s Speech promised the introduction of the Great Repeal Bill, as well as bills on agriculture, fisheries, immigration, trade, customs, nuclear safeguards and international sanctions. Other significant bills referred to in the Speech included a Data Protection Bill, a Space Industry Bill, a Smart Meter Bill, an Automated and Electrical Vehicles Bill, a National Insurance Contributions Bill, a Travel Protection Bill and a number of other Bills, including Bills that will not relate to Scotland.

However, there were some notable omissions from the speech, which suggests the Government may no longer fulfil certain Conservative Manifesto commitments, including an absence of proposals to reform the system for means-tested care for the elderly so as to include the value of an individual’s home and introducing means-tested winter fuel payments and the replacement of a state pension ‘triple-lock’ system with a ‘double-lock’ system.

What now for Brexit negotiations

One of the reasons given by the Prime Minister for calling a General Election, having previously ruled this out, was the need to have a strong mandate on which to proceed with (hard) Brexit negotiations. This has not been the result of the General Election and it is politically difficult for the Prime Minister to push on in Brexit negotiations with the position previously indicated, although there has not been a discernible change in attitude so far, particularly on the part of the Secretary of State for Exiting the European Union, David Davis. However, the proposed reliance on the DUP for support in Parliament, as well as the general desire by many people north and south of the Irish border to maintain an open border, will dictate how certain issues are dealt with in relation to Northern Ireland. If a workable and sustainable deal cannot ultimately be reached with the DUP, there is the possibility that there will be a need for a second General Election as a consequence in the near future, with Prime Minister Theresa May finding herself in the position of being on the wrong side of a vote of no confidence in Parliament.

However, notwithstanding domestic political difficulties, on Monday 19 June 2017, UK officials accompanied David Davis, to meet with the EU’s Chief Brexit Negotiator Michael Barnier, at the European Commission headquarters, to open Brexit negotiations. In a statement following the first day of negotiations, David Davis declared that discussions were ‘very productive’ and he had been ‘encouraged by the constructive approach’ of both sides. It has now been agreed that negotiation rounds will consist of plenary sessions and more specialized negotiating group meetings. The following initial negotiating groups have been established:

  • Citizens' rights
  • Financial Settlement
  • Other Separation issues

Provisionally, negotiation rounds will be held once every four weeks, unless agreed otherwise. Indicative dates for future sessions have been agreed, at which the above issues will be discussed, on:

  • Opening: 19th June
  • Second round: w/c 17th July
  • Third round: w/c 28th August
  • Fourth round: w/c 18th September
  • Fifth round: w/c 9th October.

In a statement following the first day of negotiations, Michael Barnier stated that negotiations would not move onto to trade and other matters until the European Council was satisfied that sufficient progress has been made on citizens’ issues, the financial settlement and other separation issues.

The Prime Minister is due to update European leaders on the UK’s approach to Citizens’ Rights at the European Council later this week, following which a detailed paper outlining the UK Government’s position will be published on Monday 26th June 2017.

Overall, although the format of the negotiations now appears to be a little clearer, there is still a sparsity of information about negotiating positions in the public domain and much remains to be clarified by all parties involved.

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