May Takes Control of EU Talks, Sidelining Raab: Brexit Update

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Prime Minister Theresa May has taken control of Brexit talks, relegating the Brexit Department. The pound rose on the news. Brexit Secretary Dominic Raab and Oliver Robbins, May’s negotiator, were questioned for two-and-a-half hours by lawmakers on Parliament’s Brexit Committee after a solo performance by Raab in the House of Commons chamber.

Takeaways From Afternoon With Raab and Robbins (5:42 p.m.)

• Prime Minister Theresa May’s move to take control of the talks, and relegate the Brexit department which has been a Brexiteer bastion, was interpreted by investors as a shift to a softer break from the bloc. It’s also irked pro-Brexit lawmakers.
• Brexit Secretary Dominic Raab said the U.K. may need to give further concessions to the EU as he and Olly Robbins, the U.K.’s chief Brexit negotiator, faced a grilling from lawmakers on Parliament’s Brexit committee.
• Talks on the Irish border are continuing but the U.K. proposal is a “good model,” Raab said. He sidestepped a question over whether there could be a regulatory border between Northern Ireland and the rest of the U.K.
• Raab also dodged the issue of what will happen if a trade deal with the EU isn’t agreed by the end of 2020, when the transition period finishes. It’s a “very good question,” he said.
• He said the financial settlement with the EU may change from the 35-39 billion pound estimate.
• Raab slightly diluted his earlier threat that Britain will refuse to pay the financial settlement unless the EU agrees to a trade deal.
• Raab said that government is making contingency plans in case a no-deal divorce threatens the food supply.

Raab: Second Vote Would be Bad for U.K.’s Soul (5:02 p.m.)

Raab, under questioning from Labour lawmaker Stephen Kinnock, denied knowledge of donations to the Vote Leave campaign that broke electoral law during the referendum campaign. He said it wasn’t part of his role as a member of the campaign committee to know about donations.

He accused Kinnock of trying to “discredit the referendum” through his questions. Kinnock replied that something more than Brexit was at stake, his questions were about “the soul of our democracy,” he said.

“By the way, if you want to talk about the soul of our democracy, I don’t think a second referendum would be good for the soul of our democracy,” Raab replied.

Postponed Cliff-Edge? (4:25 p.m.)

Raab was repeatedly asked what would happen if no trade deal has been agreed by the end of the transition period in Dec. 2020. After much dodging and committing to “striving” to reach that deadline, Raab said it was “a very good question.”

Many trade experts think 2020 will be a difficult deadline to reach as other trade deals have taken much longer.

Raab Will Still be Barnier’s Main Contact (4:19 p.m)

May’s spokeswoman, Alison Donnelly, told reporters that while Raab will deputize for the prime minister, he’ll still “lead the relationship with Michel Barnier,” the EU’s chief negotiator.

May has “always been in charge of the negotiations,” Donnelly said. “This is really about reflecting where we are in the process both in terms of the legislation needed, the no-deal planning work stepping up, and of course accelerating the pace of the negotiations."

Raab Sidesteps N. Ireland Regulation Question (4:14 p.m.)

Raab sidestepped a crucial question about a possible solution for the Irish border. After giving the well-worn reassurance that there will be “no customs border down the Irish Sea” (meaning that Northern Ireland won’t be in a separate regime from the rest of the U.K.), he didn’t rule out allowing the province to be in separate regulatory system.

When asked whether there could be a “regulatory border down the Irish Sea,” Raab said: “We will do everything we can to protect the integrity of the U.K.”

Raab: Hard to Say When No-Deal Will Be Clear (4:05 p.m.)

Raab said it’s “difficult to judge” when it would become clear that Britain is heading for a no-deal scenario. A lawmaker asked him how much notice the public would get if the country was heading for the cliff-edge. Raab repeated that both sides are working for a deal.

“We’ll be striving through the period up until October to make sure we deliver. I can’t give you a precise moment at which it will be clear there is no deal.”

Raab Says Still Talking on Irish Border (3:51 p.m.)

One of the glaring holes in Tuesday’s white paper is that it has nothing new to say about resolving the biggest issue that’s holding up progress in negotiations: avoiding a hard border with Ireland.

Both sides have promised to agree to a “backstop” plan to ensure there are no customs checks between Northern Ireland and the Irish Republic even if there is no overall trade deal, but the details haven’t been finalized.

Raab told the committee that while “we will continue to talk about the backstop,” the U.K.’s plan for an end state trade agreement ought to be a “good model” for avoiding a hard border.

May Seizes Upper Hand in Power Struggle (3:45 p.m.)

The announcement that May is taking control of the negotiations (and, perhaps more significantly, that her Europe unit grabs day-to-day running of the talks from the Brexit department) is the latest development in the power struggle between the camp in government that wants a clean break from the EU and those who want to stay close.

The changes are a victory for the latter group, for May and her Europe adviser, Olly Robbins, who leads the technical talks in Brussels. Ever since the negotiations began, he’s been pushing for a “softer” Brexit, and was the architect of the blueprint for the future relationship published this month. That “white paper” prompted the resignation of former Brexit Secretary David Davis and angered hardline Brexiteers.

The shake-up clearly points the government on course for a negotiation that keeps the U.K. close to EU rules. Whether Parliament can live with that is a different matter.

Raab: Further Concessions to the EU Possible (3:40 p.m.)

Raab acknowledges there may have to be further concessions to the EU, while calling the Chequers plan a "far-advanced offer."

“This isn’t our opening pitch. Of course it’s a negotiation, there’s no point in saying” (it isn’t) he says. “Obviously we will consider what M. Barnier and the EU 27 come up with.”

Key Points So Far (3:30 p.m.)

• May’s move to take control of the talks, and relegate the Brexit Department which has been a Brexiteer bastion, was interpreted by investors as a shift to a softer break from the bloc. It’s also irked pro-Brexit lawmakers.
• Raab is planning ‘regular’ meetings with his EU counterpart Michel Barnier through the summer
• Raab reiterates Brexit transition deal will be ‘strictly time limited’
• He said the financial settlement with the EU may change from the 35-39 billion pound estimate
• Raab slightly dilutes his earlier threat that Britain will refuse to pay the financial settlement unless the EU agrees to a trade deal
• There was very little in the government white paper on the critical issue of the Northern Ireland border

Lawmakers Ask Who’s Really in Charge (3:26 p.m.)

Raab and Robbins played down the significance of May’s announcement. Raab insisted that he’s been working hard with Robbins to make sure there’s "one team, one chain of command." Robbins said Raab would be the main politician involved in the talks themselves.

Brexit campaigner John Whittingdale, a member of the committee, suggested that Robbins and Raab should swap places because Robbins is the real Brexit Secretary.

Raab tried to explain it again, alluding to difficulties between Robbins and Davis (and his team) in the past. He said May is merely clarifying the situation “given some of the tensions you understandably refer to and given the mixed functions that both the Cabinet Office and DExEU were performing.”

He then added: “There is no tension between us.”

Raab Struggles on Reassurance for EU Citizens (3:18 p.m.)

Raab struggles when asked to provide reassurance to EU citizens in the U.K. in the case of no deal. Their rights will be protected if there’s an agreement, but so far the government has given no such guarantee if the talks collapse.

There will be “no wholesale removal of EU nationals or removal of their rights” if there’s no deal, Raab said.

Hilary Benn, the Labour lawmaker who chairs the committee, wasn’t convinced. “That’s not really creating reassurance,” he said. It will “create anxiety” among the U.K.’s 3 million EU citizens, particularly as Raab has been talking up the prospects of no deal, Benn said

Raab: Govt Will Ensure No-Deal Food Supplies (3:15 p.m.)

Asked by committee Chairman Hilary Benn whether the government is considering stockpiling food in the event of no-deal Brexit, Raab says “it would be wrong to consider it as the government doing the stockpiling.” His response in itself doesn’t deny there may be a need to do so. “We will look at this issue in the round and make sure there are adequate food supplies,” he says.

Pound Jumps After May Takes Charge of Talks (3:10 p.m.)

The pound jumped against the dollar and the euro after Theresa May announced she is taking control of Brexit negotiations, relegating the Brexit Department headed by Dominic Raab. That’s at least in part because traders see it as a shift toward a softer Brexit, Bloomberg reports. Sterling Likes May in Driver’s Seat of Brexit Talks

Shaky Start at Committee for Raab (3:05 p.m.)

Shortly after facing lawmakers’ questions in the House of Commons, Raab faced further interrogation from a committee of lawmakers who are Brexit experts. Raab, who has only been in post for 15 days, appeared ruffled when he didn’t know the answer to the first two questions put to him.

Detail of May’s Takeover of Brexit Negotiations (2:56 p.m.)

It was an open question whether Raab’s predecessor David Davis was in charge of the discussions with the EU, because Oliver Robbins, a civil servant in the government’s Cabinet Office, conducted most of the work.

Theresa May’s decision to take control of the talks was announced in a written statement after Raab had finished answering questions in the House of Commons on Tuesday.

“I will lead the negotiations with the European Union, with the Secretary of State for Exiting the European Union deputizing on my behalf,” May said in the written statement to Parliament. “DExEU will continue to lead on all of the Government’s preparations for Brexit: domestic preparations in both a deal and a no deal scenario, all of the necessary legislation, and preparations for the negotiations to implement the detail of the Future Framework.”

May Takes Control of Talks, Relegating Brexit Dept. (2:50 p.m.)

Prime Minister Theresa May is taking control of the EU divorce negotiations, relegating the Brexit Department led by Dominic Raab. This is important because the Brexit Department has so far taken a more hardline approach to the split, with May’s office favoring a softer divorce. Raab and his predecessor David Davis were both pro-Brexit campaigners.

The move is likely to prompt some outrage among Brexit hardliners, who are suspicious of May’s main Brexit adviser, Olly Robbins.

Signs of Trouble Ahead for May (2:38 p.m)

There was a hint of the trouble Theresa May will face when it comes to getting her eventual deal past Parliament in a question from Craig Mackinlay, a Brexiteer Conservative.

“We swallowed this fairly hideous implementation period compromise for the promise of a smooth transition to a good end state,” he said. “Now that that opening offer on the end state doesn’t pass the public sniff test, why should we approve both when we’re asked to in the autumn?”

Brexiteers like Mackinlay don’t like May’s Chequers plan for Brexit, and have already forced the government into concessions on its Taxation Bill this month.

Raab Promises Regular Meetings with Barnier (2:36 p.m.)

Raab is determined to spend more time with his EU counterpart, Michel Barnier, than his predecessor David Davis did.

While Davis mainly stayed away from the negotiating room during 2018, Raab told the Commons he will be meeting Barnier “regularly” throughout the summer. He was in Brussels last week and will be back on Thursday, he said.

Raab Dilutes Threat on Financial Settlement (2:33 p.m.)

Raab slightly diluted the threat he issued at the weekend that Britain will refuse to pay the financial settlement unless the EU agrees to a trade deal. It’s an idea officials have previously explored, but the trouble is that the EU sees the financial settlement as a question of accrued liabilities that have nothing to do with the future relationship.

Raab told lawmakers that "nothing is agreed until everything is agreed" and said he wanted to make sure that the divorce deal makes clear that the non-binding political declaration on the future trade relationship is quickly translated into legal text. But he stopped short of saying that payments would stop if a good trade deal isn’t signed.

Remember that Brexit is divided into two phases: first the divorce and only after exit day will the trade deal be negotiated in detail and signed. As part of the divorce deal, there will be an outline of what both sides want the future relationship to look like, and the U.K. Says it wants that to be as detailed as possible.

Raab: No ‘Wholesale Removal’ of EU Citizens’ Rights (2:29 p.m.)

Several lawmakers asked Raab questions about what would happen if no agreement can be reached between the U.K. and the EU.

“In the event of no deal there would be no wholesale removal of rights of EU nationals in this country,’’ Raab said. Asked if he would release plans for legislation if there is no deal outcome, he replied: “I don’t think I have ever said it is an increasing risk but it is certainly a real risk,’’ he said, adding the government is engaged in planning for all contingencies.

Commons Will Consider Deal Before EU Parliament (2:23 p.m.)

The White Paper contains an interesting insight into how the last weeks of the U.K.’s membership of the EU might play out, and highlights why negotiators are aiming to wrap up talks months in advance of Brexit day.

The document says that the government must "so far as practicable" hold the vote on the deal in the House of Commons before the European Parliament gets its say. That means that even if lawmakers in London approve the agreement, they’ll have a nervous wait to see if those in Brussels do the same.

Raab: Right to Prepare for all Eventualities (2:18 p.m.)

Asked by the pro-European Conservative lawmaker Jonathan Djanogly whether a customs union based approach would be preferable to no deal, Raab, a Brexiteer, says he won’t be “tempted” down that path.

“It is only the right thing to do to prepare for all eventualities,” he says. “Our overriding focus is on getting the best deal.”

White Paper: Financial Settlement May Change (2:10 p.m.)

The White Paper makes clear that the 35-39 billion pound estimate for the financial settlement might not be final. “A number of technical factors could affect the
size of payments due and, therefore, the ultimate value of the settlement."

The document says that the EU will inform the U.K. before each installment is due and how much the payment amount should be. A separate joint committee will oversee the financial settlement, it says.

Starmer: ‘Gaping Hole’ over Ireland in Brexit plan (2:05 p.m.)

Labour’s Brexit spokesman Keir Starmer picks a series of holes in the white paper, including an extension of sunset clauses on so-called Henry VIII powers for ministers to December 2022 -- after Parliament had agreed it would be just two years.

“If there is no deal there is nothing to implement,” Starmer told Raab in Parliament, referring to no-deal as “the elephant in the room.” With no settlement on the question of the Northern Irish border “there is a gaping hole” in the plan, Starmer said.

White Paper: Transition will be ‘strictly time limited’ (2 p.m.)

The transition period will be “strictly time-limited," the White Paper says. That means that bits of legislation that are relevant to the transition will be “sunsetted" so they expire in December 2020. The U.K. Has always said the transition would be limited in time, but many in the EU and in business suspect it might have to be extended.

Here’s what the White paper says on the financial settlement: “The financial settlement has been agreed in the context of agreeing an implementation period and the framework for our future relationship, which will be finalized and published at the same time as the Withdrawal Agreement.” It’s clear the U.K. is sticking to its guns that it must know the broad outline of the future relationship before it’ll accede to making divorce payments.

Raab: Will push EU states on plans over summer (1:55 p.m.)

Raab says he’ll be pushing EU member states over the summer to spell out how they plan to implement their side of the withdrawal agreement and fulfill their pledges, including on the rights of British citizens living in the other 27 member states.

Raab restates the long-held position that “Nothing is agreed until everything is agreed,” holding out the prospect that Britain won’t pay the financial settlement if the EU doesn’t deliver on its own commitments.

Raab is setting out his intentions to Parliament in order to allow British lawmakers time to scrutinize the government’s deal with Brussels in good time before the U.K. quits the bloc in March 2019.

Raab: Working for ‘Smooth and Orderly Brexit’ (1:50 p.m.)

“This government is committed to delivering a smooth and orderly Brexit,” Raab says in his opening remarks, provoking the mirth of Labour’s foreign affairs spokeswoman, Emily Thornberry. He lists things that have been agreed -- around 80 percent of the withdrawal deal, including provisions for the rights of EU citizens, the implementation period and the divorce payment.

Raab says the government expects to conclude an agreement with the EU in October, but that it is outlining its plans now in order to give Parliament the time it needs to scrutinize the proposals.

Earlier:
Brexit Bulletin: Out of the Shadows
What ‘No-Deal Brexit’ Means and How It May Be Averted: QuickTake
No-Deal Brexit Is Crazy, But Might Just Happen: Therese Raphael
May Tells U.K.’s Leave-Voting Heartlands They Need a Soft Brexit

--With assistance from Emma Ross-Thomas, Stuart Biggs, Kitty Donaldson and Alex Morales.

To contact the reporters on this story: Tim Ross in London at tross54@bloomberg.net;Ian Wishart in Brussels at iwishart@bloomberg.net;Alex Morales in London at amorales2@bloomberg.net

To contact the editors responsible for this story: Emma Ross-Thomas at erossthomas@bloomberg.net, Thomas Penny, Stuart Biggs

©2018 Bloomberg L.P.