Why Unelected Labour Lords Offer Hope to Business on Brexit

(Bloomberg) -- Prime Minister Theresa May’s key Brexit law is about to face its toughest battle in Parliament, as the main opposition Labour Party vows to re-write the legislation in the interests of protecting jobs and the economy.

Angela Smith, Labour’s leader in the second chamber of Britain’s Parliament, is drafting a series of amendments to the EU Withdrawal Bill designed to ensure there is a smooth transition for businesses between the rules they follow as members of the bloc and whatever comes next. May’s Conservatives don’t have a majority in the House of Lords.

Why Unelected Labour Lords Offer Hope to Business on Brexit

In an interview with Bloomberg in her London office, Smith said Labour will try to re-write the legislation on three key points: clarifying the date of Britain’s exit; stopping the government diverging from EU regulations without detailed scrutiny of Parliament; and making clear the status of European Court of Justice rulings after Brexit.

“We will seek to amend the Bill so it becomes an enabling measure for -- rather than an obstacle to -- a transitional period, as is currently the case,” Smith said. “The theme that runs through everything we do is that there’s a transition that works and doesn’t just provide a second cliff edge later on.”

The battle of the Brexit bill piles the pressure on May just as her negotiations with the EU over Britain’s departure intensify. The two sides have set a goal of finalizing the terms of Brexit and mapping out a new trade deal by October, to allow time for European and British legislators to ratify the agreement before the U.K. leaves the bloc on March 29, 2019.

Crunch Time

Towards the end of this month, London and Brussels will start talks on a transition period lasting up to two years after Brexit to allow businesses time to adjust to the new arrangements. The Lords will begin detailed scrutiny of the EU Withdrawal Bill at around the same time -- on Jan. 30. 

The transition period is due to end in December 2020 so if a new trade deal hasn’t been completed by then, there’s a risk that the cliff edge the grace period was designed to avoid will merely have been postponed.

The Withdrawal Bill is critical to May’s plans for Brexit. It aims to replicate thousands of existing EU regulations on the domestic British statute book so there is no legal black hole on the day the U.K. leaves the bloc. 

Yet the passage of the law has been far from smooth as opponents of May’s vision for Brexit -- taking Britain out of the EU single market and customs union -- tried to tear it up. She suffered a serious defeat on the law last month, when rebels in her Conservative party defied her orders and voted alongside Labour in the House of Commons.

The result was that Parliament is now set to get a binding vote on whether to accept the outcome of May’s negotiations, before Brexit happens.

Forensic Test

In the interview, Smith said the difficulties May faced in the Commons will be dwarfed by the kind of treatment the bill is likely to get in the House of Lords. “I think the debate here will be more forensic, I think it will be more detailed and less ideological,” she said. The government is likely to be defeated on amendments, and Labour is in talks with other parties as well as free-thinking Tories and independent lawmakers -- to coordinate the opposition to the bill.

Smith insisted Labour won’t block the law, and isn’t trying to thwart Brexit. Yet she’s concerned that May’s negotiations are faltering and gives notice that Labour reserves the right to vote down the prime minister’s final exit deal, when it comes.

Lords Threatened

Despite saber-rattling from Brexit supporters who say the unelected House of Lords should be abolished if it obstructs the will of the people on Brexit, Smith is determined to force the elected House of Commons to “think again” on key clauses in the bill.

“We are not going to be bullied into abdicating and just stepping back,”she said. “We have a role to play, we will do it responsibly, but I won’t be bullied into not fulfilling that role.”

For Smith, Labour’s key criteria for assessing May’s Brexit deal will be whether it protects jobs, workers’ rights, and helps businesses cope with the upheaval. If Labour wins power at the next election -- which is due in 2022 but could come sooner -- the party may need to reassess its support for exiting the EU, she said. “It would look at the terms of Brexit and what Brexit will look like,” she said. “Then a decision will be made.”

©2018 Bloomberg L.P.