Brexit talks round three and will Theresa May cling on?
The political news season has kicked off again with David Davis going head-to-head with Michel Barnier in Brussels - have the talks stalled already? And does Theresa May have any chance of leading her party into the next election? With Alex Barker and James Blitz of the Financial Times, plus Isabel Hardman from The Spectator magazine.
Presented by Sebastian Payne. Produced by Anna Dedhar. Edited by Paolo Pascual.
Welcome to FT Politics, the Financial Times' podcast on British politics. I'm Sebastian Payne. And yes, summer is over. Autumn is approaching. And we have proper political news, once again. So we're back to our regular format.
In this week's episode, we're going to be looking at the latest Brexit shenanigans in Brussels and whether Theresa May is really going to lead the conservatives into the next general election. I'm delighted to be joined on the line from Brussels by Alex Barker, who's our Brussels bureau chief, Whitehall editor James Blitz, plus Isabel Hardman, who's assistant editor of The Spectator magazine. Thank you all for joining.
The third round of Brexit negotiations took place this week, with David Davis representing the British side and Michel Barnier speaking up on behalf of the EU. The talks took place hours before behind closed doors. So what actually happened remains private.
But what we did see was a slightly bizarre press conference on Thursday, which offered an insight into where we are at. Mr. Davis said that concrete progress had been made on the key issues, while Monsieur Barnier said that no progress had been made on the key issues. And once again, we are back to that issue of money and how much the UK should pay as part of a divorce settlement and the sequencing of the talks and should we be talking about the future.
So Alex Barker, can you kick us off by giving us the side from Brussels on how this week went? Was it a good week, a bad week, or a middling one for the Brexit talks?
Well, Michel Barnier made it pretty clear they didn't see any significant progress on the biggest questions. There were advances on a few technical areas, a bit on pending cases of ECJ, a bit on citizen rights, absolutely nothing on the money. And for the main part, I think you saw the two sides talking at cross-purposes on most of the key issues.
They're not quite yet willing to play the big political cards. They're waiting until later in the year. The UK side, for instance, didn't raise the issue of transition. Barnier gave no indication that he was going to be willing to talk about issues around the future. They stuck to their positions. And it's really now adding to the pressure on the next two rounds before October to see if you can see a big breakthrough there.
So October's a really crucial date in this because that's when all the EU 27 leaders gather together and judge whether there has been significant enough progress on the divorce terms to look towards the future. And from the British side, that's very important to essentially say Brexit has been a success, and Theresa May wants to go to that, get the tick boxes so they can then talk about transition and then really what interests the British government, which is that comprehensive free trade deal. But at the rate we're go at the moment, do you think she's going to get that progress in October, Alex?
At this pace, no. But it's a question of whether after Theresa May's speech in September, perhaps, you see a quickening of the political pace that will allow something like that. The EU side worry that you'll see a bit of movement, maybe, after the Tory Party conference in October. But that might be too late for them to get the machine going on the EU side to get the kind of clearances you need to work up to that summit and get an approval done.
For the most part, I think people are working on December as a more likely turning point in the discussions. And I think in Brussels in general, in big negotiations, especially around money, you usually see two runs at a deal. And we may well see that on October. And I think the end of the year is actually not too bad for Theresa May. She can still say it slipped a bit, but we're still making progress.
Now, James Blitz, let's look at the British side of this-- that the sense we got from David Davis, who's in charge of the Brexit talks, and also Liam Fox, who is the International Trade Secretary, is one of a bit of frustration here about flexibility because David Davis has a very broad mandate. He doesn't actually have to stick between many guidelines. Really, it's just what he can sell to the British public and to the House of Commons.
But Michel Barnier has a very fixed mandate from the EU 27. And we saw in that press conference that he can't really deviate from that. And there was a sense in that press conference on Thursday that Mr. Davis really wanted more flexibility. And it wasn't going to come.
Yes. I think that's right. I think there's a view in the UK that pressure can be put on Michel and the Commission, perhaps, by appealing to the EU heads of government to try and loosen things up a bit and not stick so rigidly to this idea that there's got to be sufficient progress on the issues relating to the divorce-- in particular, the financial settlement-- before you can move onto the wider trade deal.
But I think you can make an argument that the British have something of a case here. There are two things one can say. First of all, it's not politically realistic-- this is an argument the British would make-- that they should make some kind of firm commitment on a financial settlement without there being some kind of sense of a quid pro quo in terms of--
What are we getting in the future?
--in terms of what we're getting in return. It would be politically very difficult for any government to do that. And that's not a bad argument to make.
And I think the second argument is that actually, the financial settlement and what is agreed there is very much tied up with this whole question of transition because if you can get a kind of agreement on transition-- say, that we have a three-year transitional deal-- at least in terms of the regular EU budget payments that the UK continues to make, you could divide that up-- say, 10 billion euros a year over those three years.
And so the question is, could we get some movement on a transition, because if we get movement on transition, then we can get movement on a financial settlement. That's what the British would argue. The Commission seems to be saying no. We want movement on the financial settlement. And then we'll talk about transition.
But the point is-- and I think it is an argument that outside experts make-- is with a little bit of creative work, you could actually get to some kind of movement there. And in a sense, it does require European heads of government to put a little pressure on Mr. Barnier and the Commission to move things in that direction.
And I guess one of the things we did see is this continual reference by both Mr. Barnier and Mr. David this week to the UK's obligations as a country, both legal and financial. And clearly, there are different interpretations. And we heard this rather colourful report in the Daily Telegraph this week of this Whitehall wunderkind who stood up and dismantled the EU's case for this so-called 100 billion pound divorce bill.
But it's actually, as you said, James, a lot more complicated because of the transition. But we still haven't heard anything from the British government on what they see as a fair sum because we've had white papers on all sorts this summer, from Northern Ireland to the European Court of Justice to citizens' rights, but nothing on the money issue. And I think that is certainly proving very frustrating. On the Brussels side, you have to wonder if they've got this brilliant legal case that shocked Michel Barnier, why don't they put it out there?
It's a very good point. And you are absolutely right that over the last two weeks, we've seen no fewer than seventh position papers on a wide range of issues. But on what is the number one issue, really, or the most toxic issue, which is the money, we've seen absolutely nothing.
I think the British government has got itself into a little bit of a bind. I put forth some points earlier on where they have got a case. One of the big difficulties for Theresa May's government is that they simply haven't domestically made any case to the British public--
No groundwork at all.
No groundwork has been done at all on why this money has to be paid or how any sum has to be paid. We had a report today in the FT from [INAUDIBLE], where our reporter, Jim Pickard, was going out and hearing people saying, we absolutely do not want to see any money paid at all. There was an ICM poll in The Guardian earlier this week which showed that when people were asked, do you think the UK should pay 30 billion euros to the EU budget, something like 70% to 75% of people said no.
And of course, the other thing, as well, is that the British still have hanging over them the wretched 350 million pounds a week payment to the NHS, which was made in the course of the European referendum campaign by the [? Leavers, ?] which has never been satisfactorily or adequately demolished because it should be demolished by ministers. So if the British are being very difficult and have got themselves into a problem, it is largely because they have failed to make the political groundwork at home. And that still is a big issue. Even if there is some kind of deal, it's going to be very difficult for Mrs. May to turn around, as she had on so many issues, and explain this to the public.
One point I'd make in reference to James' point on the transition-- the transition is absolutely essential to bringing this deal together in the first phase because it's the way that you can overcome the financial settlement while, at the same time, offering the UK the kind of assurances it's looking for in the future, and at least the transition into the future.
What's interesting was David Davis never raised this in the negotiations this week. And you can see in that some of the tactical considerations that are coming into this. David Davis probably thinks the EU need the money, they need assurances on the money quite soon. It's one of the points of leverage the UK have.
If you start saying, we'd like a transition, too early, it's a sign of weakness and a concession, in some way. So you can see them eyeing each other up and dancing around this issue. And when that's played and how that card is played isn't quite clear yet. But it's really how the threads of this will come together in the first phase, when we see that in October or December.
We've certainly seen, James, a toughening up of the rhetoric in the British discourse here over Brexit over past week. Then Liam Fox, who's the international trade [INAUDIBLE] of course, he has no interest in the divorce process at all. All he wants to really talk about is the future and negotiating free trade deals with Japan, where Mrs. May has been this week.
And I think that really, for me, captured where we are in this debate [INAUDIBLE] Japan. She got a friendly welcome. But she was also told, we're not going to talk about a comprehensive free trade deal until you've got your relationship with the EU settled. And Japan was far more interested in knowing about clarity and assurances on what Brexit is going to look like than talking about all the advantages and [INAUDIBLE] trade we could get at some point in the future, which we still have no idea when that is going to be.
But then we saw Dr. Fox, again, saying this idea of the EU blackmailing Britain. And I think that does play into this sort of narrative that's developing at home that the EU is being unfair, in some way, in these talks-- that they've seen the reports of all these white papers. And it looks like the UK's doing a lot of preparation.
And to a lot of people, they might say, well, actually, this is confirming exactly what we thought about the EU all along. They're being unreasonable. And they want to punish Britain.
Yes. That is right. On that latter point, [INAUDIBLE] your earlier point about trade with Japan-- on the latter point, I don't think there's any doubt-- [INAUDIBLE] your views and Alex's on it-- but we're coming up to party conference season in the UK-- conservatives at the start of October, Labour in September.
It doesn't look to me like this is a period where we're going to get much nice diplomatic talk from Mrs. May and British ministers. It felt to me, when Liam Fox came up with the word blackmail-- and Liam Fox has been around long enough to come up with the word blackmail after he's thought about it a lot.
It's not something he's just put out on the spur of the moment. It seems to me that he's paving the way now for three or four, really, very ugly and unpleasant weeks of rhetoric as we go through conference season.
Now, one has to remember that Mrs. May is politically still very weak. And it's much better for her and much more effective for her if she goes back to doing a bit of euro bashing in this phase to get [INAUDIBLE]
It's what British politicians do whenever they're in doubt.
I think the question is, which she raises, is there a risk this is going to get a bit out of control and that we're going to move to a situation where it's much more difficult to roll back in late October, November, December, when politicians and officials have to start being a lot more sensible?
As for the stuff in Japan, no big surprises there. The Japanese, like lots of other non-EU states, are basically waiting to see what is going to happen in the UK in terms of the kind of deal that's done on Brexit.
And one thing we haven't mentioned is Labour's move this week in terms of saying, actually, we want to have a transition which keeps us in the single market and keeps us in the customs union-- has quite a big impact in terms of changing the nature of the debate in the UK. So there's an awful lot that's now very fluid on the British side.
And Alex, obviously, Fox [INAUDIBLE] there, speaking to a domestic audience here. Michel Barnier has his audience, as well, which is the EU 27 [INAUDIBLE]. And we said he's got that fixed mandate. And he can't look as if he's particularly wavering to that. How much attention is there paid in Brussels to this rousing back in the UK, or is it just accepted-- oh, well. That's going to happen.
[INAUDIBLE]. They, of course, pay attention to the debate in the UK. And they're quite baffled by it, to be honest. If you speak to them, they would see, on the one side, the kind of softening on some of the conditions that you'd see around transition and a exit deal with ECJ, for instance, and the money in the British debate over the summer.
And at the same time, you can see a narrative reemerging on the need for a plan B and to show that the UK is willing to walk away-- the sense in the UK that EU businesses will ultimately realise that they've got lots to lose and will be pressuring governments.
And the third thing is that Germany's in charge. And you wait until after the election. And the Commission's not really in the front seat of this. And Merkel will home a deal. They genuinely see those as kind of upside down views of what's going on here and that there's a fundamental misjudgment of how the EU 27 will be handling this over the coming months.
They so far to date have put politics over economics. They've tended to do that in most of the big crises they've had over the past few years and in their relations with external partners. And we're probably betting on a outcome that's less likely rather than a trend of the way that the EU handles big issues like this.
So it's a big gamble. And I think from this side, you're not yet seeing the panic or the kind of weakening of resolve among the 27 that you might think there is if you worry about the Brexit negotiations going badly.
Remember, the European Council were the ones that wrote the guidelines for Barnier. They can, at any point, request a new summit to change those. They've not done so so far. And even UK allies-- the Swedes, the Irish, the Dutch-- are holding the line with the centre. And it's going to take quite a lot for that to shift significantly.
And very quickly, last thought, James, is there any sense to panic from the UK side yet?
There's no panic yet. I think, as Alex said, it's unlikely something will be agreed on October the 19th, 20th. It will be very interesting to see what the market and political reaction will be if there is failure on October the 19th, 20th, and how quickly--
And public opinion as well.
And public opinion, as well, and how quickly things will stabilise. I mean, as you have rightly said, Seb, that summit on October the 19th, 20th is now actually the critical moment.
While David Davis has been busy in Europe, Theresa May has occupied herself further afield. The prime minister jetted off to Japan this week to discuss the prospects of a future free trade deal with one of the UK's close allies.
But in a round of interviews with journalists, Mrs. May surprisingly stated that she will lead her party into the next general election despite the catastrophic performance in June's vote. Was it a verbal misstep, a true intention, or just the reality of what she had to say?
So Isabel Hardman, you've written an excellent feature in this week's Spectator magazine about Mrs. May's position and why she's got to really spend her autumn saying sorry to her party. Now, before we get onto that, do you think she said what she meant to say about leading the Tories into the next election?
Well, I think there was definitely a recognition in Number 10 that some of the stories that have been coming out over the last few weeks that she was going to leave directly after the Brexit negotiations in August 2019. They needed to stamp on those.
There's two schools of thought within the Tory Party as to whether what she then went on to say in those interviews on her trip was deliberate or whether she'd been thinking about it. The question came up. And she just said an answer. And whether or not that answer was the most helpful one is one that [INAUDIBLE] slightly divided over.
Yes, because I spoke to a senior person at Number 10 who just sort of shrugged his shoulders at me and said, what else could she have said in that situation, because if you give a date or say, well, I'm going to stay as long as the party wants me, which has been her traditional line on this, then it's a countdown clock. And with Tory conference coming up, it would have turned into even more of a beauty parade than it's already been for people who are going to succeed her.
It is. But it's still a risky decision because it could be a way of saying [INAUDIBLE] actually, you just leave me alone. I'm still in charge. I'm still prime minister.
But it could also be a challenge to some of those people who were undermining her before the summer recess to start up again by separating themselves on policy issues from the prime minister, giving unhelpful hits [INAUDIBLE] those sorts of things that actually, most conservatives I spoke to before she made these comments in the interview said that they'd actually managed to stop happening and that people were starting to come together and realise they just needed to get on with it.
I wonder whether some of her colleagues will actually think, well, if she thinks she's going to carry on, I need to start building up the troops for my own challenge against her because it actually does raise the prospect that someone may need to turn around to her and say, right. We're going to fight this out, Theresa, as opposed to just waiting for her to go [INAUDIBLE] court.
Indeed. I spoke to one ally of David Davis this week who's sort of been moving behind the scenes, who was most displeased by this [INAUDIBLE], imagining some kind of transition from Theresa May to David Davis, the Brexit Secretary, later this year, although I think that was maybe a bit more pie in the sky fantasy than actual reality-based there.
But moving on to some of the things you've talked about in your excellent piece, Theresa May is in a weaker position. There's no two ways about it. She was asked, as you said, to go away on this holiday. Please give us some space to take a breather, recover from what's happened in June.
And she's now come back. And she's got to sort of try reassert her authority-- she is still prime minister-- a very perilous time in British politics-- and say sorry to her party because she really did muck it up.
Yes. She needs to ask for the party's forgiveness in a very gentle way. And again, I'm not sure that her comments have really helped in that respect because you have people like [INAUDIBLE] going out on the airwaves to say, well, she needs to prove herself, basically, before she can start talking about a long-term future.
What the Conservative Party always wants to feel is as though it's well-loved by its leader. That was a problem that David Cameron had repeatedly [INAUDIBLE] didn't feel that he looked at them enough or paid them enough attention, a bit like teenagers at a disco. But it is a very important thing for a leader to do. So she does need to really love on her ministers, I think, almost more than her back benchers.
The back benchers have been strikingly on side for a long time thanks to the efforts of Graham Brady, who's the chair of the 1922 Committee. And they were the people who really kept Theresa May in place when she could, actually-- has had to decide that she wasn't wanted anymore by her own party.
They were the ones who turned on ministers who were briefing against her and said, stop it. And they are the ones who are still saying that she could quite reasonably go through reshuffle of her ministers, even though a lot of people would say, well, she's far too weak to move anyone. But they'll start stabilising her further.
So she's got the back benchers on side. She obviously needs to keep them on side. But I think it's her ministers who are still angry at the way they were treated by May, and particularly her advisors like Timothy [INAUDIBLE] resigned following the election, and who were annoyed, obviously, that the election result means that they cannot, as ministers, achieve the things on policy that they wanted to and that they'd been dreaming of doing under a big majority.
And there's this very telling scene that you've written about, that in the election, when the manifesto came out that's been much pulled apart and discussed, where the members of the cabinet opened this document and there was this collective surprise at some of the proposals that were in here, because it was written in very odd silos, that each cabinet secretary was asked to go away, and, what would you like to put in this? And then Gummer, who was then the cabinet office minister, who later lost his seat, and Nick Timothy put this all together into this big, bold document.
But the fact was no one really knew what was going on. And Jeremy Hunt in particular, health secretary, had this huge social care proposal that he was then expected to go out and defend, and didn't really seem to know much about it. And that's not a great way to treat your colleagues. And they've obviously got their own domestic ambitions. They've got to try and move forward, as well as dealing with Brexit in the next few months.
Yes, so there are lots of ministers who are feeling quite sore. I think on social care, obviously there was a recognition after the election that they really messed that one up and that they need to do things very differently in terms of consulting ministers.
But I think there was an additional problem with social care in particular, which is that it does fall between two departments. It's the Communities and Local Government department, which is really charged with administering this policy. But it's the Department of Health that does a lot of the funding. And that also has the knock-on effect, if social care isn't working, which it isn't at the moment, of greater pressure on acute health services. There isn't one department that has it as a priority.
Obviously, the NHS, NHS funding, is always going to be Jeremy Hunt's priority. And similarly, housing is always going to be CRG's priority. So it's always fallen between two secretaries of state, which isn't a good thing. And I think that there are definitely moves to change that now, with Damian Green trying to pick that up in his new role. He's the first secretary of state and Theresa May's second in command, basically.
The reason Theresa May is essentially where she is, still in number 10, is because there's not an obvious replacement for her. And the reasons she makes sense now are pretty much the same reasons she made since last summer, which is that she's not an ardent remainer or leaver. She can split the difference down the middle.
And if you're an ambitious, remain-supporting conservative, you wouldn't want to try and get rid of her, because you know you're probably going to get someone who's a lot more Brexity. And on the other hand, she hasn't really done anything to annoy the Brexiters yet. So for the moment, that sort of paralysis is quite good for her.
But there are certainly people who are thinking about when her term comes to an end, you know, given this process she's got to go through of saying sorry over the summer, and get through the EU council that we talked about earlier in the podcast, and the budget, and this room at Lancaster House 2.0 speech, she's not got that much political capital. And she's going to have to spend a fair bit of it this autumn. So you do wonder, will she be strong enough towards the end of that to do a reshuffle, which I think there's a very good case for, but it will create even further divisions within the party.
Yes, she does need to be economical with her political capital, because she doesn't have a surplus of it at the moment. And so she can't go around annoying people, sack ministers, and then expect the party to continue to back her when she tries to get things through Parliament. I think Brexit also does help her in one respect, in that there aren't that many leadership contenders who actually want to have anything to do with the Brexit negotiations, in the sense that they don't want to take responsibility for a botched job. They'd much rather come in after the Brexit negotiations and say, well, you know, here's a mess that I can sort out, rather like actually Theresa May did after David Cameron accidentally took Britain out of the European Union in the referendum. She turned up and said, well, it's happened. I'm going to make a success of it, as if to say, well, the previous prime minister made a mess, but here I am to clear it up. And I wouldn't be surprised if the person who takes over from her ends up saying something quite similar.
There's been a lot of 2010, 2015 MPs who have been putting their thinking caps on this summer about the future of the party and ideas to take it forward into-- well, hopefully win the next election. And one interesting theme I've picked up from speaking to them, as people have returned to London, is this idea of looking beyond Brexit. They're not talking about, how do we get a free trade deal? How do we have a transition? They essentially want to leave that to the current generation.
And this is this whole idea that they're going to look forward at the next elections. So all these people who have ambitions for the future to reach high office, they all seem to be thinking about, what comes after Theresa May? And I think we can expect to hear more from them over conferences and as the year progresses.
Yeah, there are definitely a lot of very ambitious people who came in at the last election who are very impressive, and they've got a really big future ahead of them. But it's also quite convenient, isn't it really, just to say, well, we're not going to focus too much on Brexit.
Brexit is really complicated. And MPs actually have a very poor knowledge and understanding of the European Union at the best of times. And it really actually, as tactically clever as that might be, I also think it's a bit of a dereliction of duty on their part, because they are legislators. They are there to examine what the government brings before Parliament, to ensure that the Brexit negotiations are as sharp as they possibly could be from the government's side, by holding ministers to account and urging questions and statements. And if they're starting to say, well, we need to think about beyond Brexit, well, of course there's more to life than Brexit. But surely as MPs, they also want to make sure that their party's going to get it right now.
And finally, it seems the most troublesome time for Theresa May is not really actually this autumn. It's going to be the summer of 2019, because that's the point at which, if everything goes as we expect it will, we will have formally left the EU, even if nothing's actually changed due to a transition deal. The DUP will be knocking on the door again, asking for some more money to prop up the government. And it's also the point at which it's a natural transition.
And I think Lord Heseltine wrote in an article for the Times that this is the point at which there's most likely to be a leadership change or a general election. Where does your gut instinct say Theresa May will go? And I know predictions are never a good idea. But roughly, what do you think?
Well, you know, nowadays, my gut instinct, I only rely on for when I'm going to have my next meal and what I'm going to eat. Beyond that, I think 2019 just seems so far away, that this time last year, the thought of an election seemed very distant indeed. I don't know.
I think one thing that is worth considering is we talked a lot about the plans that men make, and actually, the plans of mice and men always fall apart, don't they? And so I suspect that there will be moments in the next few months, over the next year, that make things very difficult for the government-- crises, for instance, and the UK Border Force, or something like that, that the prime minister's authority is really tested on.
And as much as she can plan, she can't predict what's going to happen to her government that she needs to deal with. And that will be a real test for her. And it may change things so much that-- talking about her transition period in 2019, it seems a bit silly in a few months' time. But that's a very long-winded way of saying, [INAUDIBLE], I'm not going to make any predictions.
Absolutely. And I think if you look at the Grenfell Tower tragedy, that was arguably, I think, when the prime minister looked at her most weak this year, because she did not seem on top of it. She seemed out of touch and unable to deal with moments like that, you know?
She seemed frightened of people, didn't she?
She did completely. And I think, god forbid something like that happens again. But if there is a big national crisis, that I agree with you, that her tenure in number 10 could come to an end a bit shorter.
Well, that's it for this week's episode of FT Politics. Thank you very much to Alex, James, and Isabel for joining. We'll be back next week for another instalment. This episode was produced by Anna [INAUDIBLE]. Until then, thank you for listening.