Theresa May, U.K. prime minister. (Photographer: Matthew Lloyd/Bloomberg)

May Said to Weigh Concessions to Win Over Rebels: Brexit Update

(Bloomberg) -- Theresa May is searching for a compromise to avoid a crushing defeat on her Brexit deal in a key vote in Parliament next week.

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After she was forced to publish secret legal advice setting out the flaws in the divorce agreement, the prime minister held talks with Conservatives aimed at winning over rebels.

Key Developments:

  • May’s chief whip meets pro-Brexit Tory rebels as government weighs ‘Parliament lock’ compromise offer
  • Government publishes 6-page legal advice that Attorney General Geoffrey Cox sent to May on Brexit deal
  • Advice says U.K. will be legally trapped “indefinitely” in the Irish border backstop, which pro-Brexit Tories hate because it binds Britain to EU rules they want to escape
  • Labour, DUP and Tory MPs step up attacks on May over her Brexit agreement

Rees-Mogg Says DUP Could Bring Down May (6.30 p.m.)

Northern Ireland’s Democratic Unionist Party is said to be threatening to withdraw its support for May’s minority Tory administration, a decision that could ultimately bring down the government.

Inside the ongoing ERG meeting, Brexit-backing Tory Jacob Rees-Mogg has told his colleagues about private talks he held earlier with the DUP, according to two people in the room.

The DUP’s deputy leader Nigel Dodds told Rees-Mogg that the DUP will keep supporting May as long as her Brexit deal -- with the contentious Irish backstop -- is defeated. If May’s deal succeeds, the DUP could walk away from its agreement with the Tories, and vote against May’s government in a no confidence motion. That would potentially trigger a general election.

May Looking at All Options to Win Brexit Vote (7:25 p.m.)

The premier is looking at all options to persuade as many lawmakers as possible to support its deal and win the crucial vote on Tuesday, according to a government official. May is listening to colleagues and will do everything she can to convince Conservatives to support the divorce agreement, the official said.

Key Union Warns Labour Against New Referendum (6:30 p.m.)

Len McCluskey, general secretary of Unite, Labour’s biggest financial backer, met with a group of the party’s MPs on Tuesday to discuss Brexit and pressed his case that a second referendum would be divisive and would risk alienating voters.

A group of Labour lawmakers have been pressing for another plebiscite and the campaign has picked up pace in recent weeks, with some Tory lawmakers joining calls for a "People’s Vote." While McCluskey has made his views clear before, the timing of his intervention adds to its significance.

May Seeks Compromise as Chief Whip Meets Rebels (5.30 p.m.)

The prime minister is sending Chief Whip Julian Smith to negotiate with the pro-Brexit European Research Group of Tory MPs tonight. The meeting is due to start at 6 p.m., according to people familiar with the matter.

May’s team have been searching for an offer that can win over some rebel Tories as she’s facing the prospect of a huge defeat when her Brexit deal is put to a vote in the Commons for approval on Dec. 11.

The idea she’s apparently hit on is to add some words to her motion on the deal spelling out a so-called “Parliament lock” as a guarantee that British politicians would need to give their consent before the most contentious part of the exit deal comes into force. It’s effectively a veto for the House of Commons which could vote to stop the U.K. entering the Irish border backstop arrangement.

Some Pro-Brexit Tories are not convinced. Others believe it could be enough to win over a few rebels, though it still seems unlikely that it will allow May to win her vote next Tuesday.

“We’re between a rock and a hard place; we risk Brexit not getting through,” pro-Brexit Tory Edward Leigh said in an interview. “I don’t know how I’m going to vote next week. I’m looking for a lifeboat from the government in the next few days.”

Varadkar: No Negotiations With Parliament (4:35 p.m.)

Irish Prime Minister Leo Varadkar said the idea of negotiating Brexit with the U.K. Parliament is unworkable, as what he described as “chaos” in London mounts.

“The agreement that we have took 18 months to negotiate, 500 pages long, 28 governments agreed to it,” Varadkar told lawmakers in Dublin.

“The suggestion that somehow if it is defeated we would somehow find ourselves negotiating with a parliament really is quite unworkable,” he said. “To see a parliamentary delegation entering the tunnel to reopen the talks is just not something that is feasible.”

May ‘Talking to Colleagues’ on Backstop (4:20 p.m.)

The government is still trying hard to persuade lawmakers that the backstop isn’t as bad as they think it is. In the House of Commons earlier, May said she was still listening to colleagues’ concerns on the Irish backstop, and her officials told reporters this afternoon those discussions have been productive and likely to continue over the next few days.

All of which hints at a possible concession or a government amendment ahead of the key vote on Tuesday -- what is clear is that if May’s team doesn’t come up with something on the backstop language, there’s little chance of winning it.

May’s spokesman, James Slack, told reporters just now that if the U.K. did enter the backstop -- which kicks in if the two sides can’t agree a broader trade deal -- the government would look into “keeping the rest of the U.K aligned with Northern Ireland."

That’s an attempt to answer the criticism from the DUP’s Nigel Dodds earlier (1:43 p.m.) that the Brexit deal erects “internal economic and trade barriers” between Northern Ireland and the rest of the U.K.

Slack also refused to deny the idea it might be possible to create an exit mechanism from the backstop without changing the Withdrawal Agreement, saying only that the Withdrawal Agreement itself is "complete."

Chancellor Hammond Warns on Rejecting Deal (1:58 p.m.)

Britain will be in “uncharted territory” if Parliament rejects the deal in a key vote next week, Chancellor of the Exchequer Philip Hammond said. Politicians must be “fully aware” of the implications of adopting any of the alternatives to May’s divorce settlement, he told the Treasury Committee.

Hammond also dismissed concerns over the Brexit backstop outlined in government legal advice by his cabinet colleague, Attorney General Geoffrey Cox.

The chancellor said he didn’t accept the idea that the Irish border backstop could endure forever. A time-limited arrangement would be attractive, but it’s not on offer, he said.

Hammond also said the Spring Statement -- which sets out his economic vision and forecasts -- will come out before March 29, 2019, the date when the U.K. is leaving the EU.

N. Ireland to Stay Locked in EU Customs Union (1.43 p.m.)

Cox’s letter lays bare in the starkest terms how the backstop will split Northern Ireland away from the rest of the U.K. This is a dangerous finding for May because keeping the four nations that make up the U.K. together is a totemic issue for many Tories.

And the unity of the U.K. is of fundamental importance to the small party of 10 MPs propping up May’s minority Tory government: Northern Ireland’s Democratic Unionist Party. If the DUP pull the plug, May’s government ultimately collapses.

In his letter, Cox says:

  • The backstop means Northern Ireland “remains in the EU’s Customs Union” and will apply “the whole of” the EU’s customs laws, while the rest of the U.K. leaves and forms a separate customs union with the bloc
  • “Northern Ireland will remain in the EU’s Single Market for Goods” as well, Cox writes
  • The European Court of Justice and the European Commission will continue to hold sway in Northern Ireland, but not on the British mainland
  • These differences between Great Britain and Northern Ireland will mean goods crossing the Irish sea from east to west will need customs declarations and regulatory checks, Cox says
  • For regulatory purposes, mainland Britain “is essentially treated as a third country” by Northern Ireland for incoming goods, Cox writes

The DUP reacted with immediate horror to the blunt assessment of new barriers between the mainland and Northern Ireland. “This is totally unacceptable and economically mad in that it will be erecting internal economic and trade barriers within the United Kingdom,” DUP deputy leader Nigel Dodds said.

Cox says the backstop will continue to apply “in whole or in part” until new U.K.-EU trade terms are agreed to. For Dodds, this carries the threat of further divergence between Britain and Northern Ireland in the future, with his region potentially remaining locked inside the EU’s restrictive customs union forever while the rest of the U.K. moves further away from the bloc’s rules over time.

May: Government Did Not ‘Conceal Facts’ (12:50 p.m.)

May insisted in Parliament she had not “concealed the facts” on the Brexit deal and that “careful analysis” shows there’s no difference between the statement by the attorney general on Monday and the document published today.

“The advice that he is holding in his left hand has no difference from the statement that was given,” she told the Scottish National Party’s Ian Blackford.

May also said she’s still listening to colleagues’ concerns regarding the Irish backstop and considering the way forward.

Starmer: Legal Advice Shows ‘Weakness’ of Deal (12:20 p.m.)

Labour Brexit spokesman Keir Starmer said on Twitter publication of the document is crucial for the proper consideration of May’s deal.

“All week we have heard from government ministers that releasing this information could harm the national interest. Nothing of the sort,” he said. “All this advice reveals is the central weaknesses in the Government’s deal”

Meanwhile Nigel Dodds, deputy leader of the Democratic Unionist Party which props up May’s government, called the advice “devastating” in that it proves Northern Ireland would be in full EU customs union while the rest of mainland Britain is not. Goods passing from Great Britain to Northern Ireland will be subject to a declaration process, he said on Twitter.

The opposition is also coming in from members of May’s Conservative Party. Marcus Fysh said in an interview the legal advice “is totally unacceptable.”

“I don’t see how any member of parliament can think it’s appropriate to vote for the withdrawal agreement,” he said. “I’m astonished the government has even brought it this far.”

U.K. Trapped in Irish Backstop ‘Indefinitely’ (11.45 a.m.)

The six-page document risks igniting a furious response from pro-Brexit Tories. That’s because -- in black and white -- it makes clear that the U.K. cannot escape from the so-called Irish border “backstop.” And worse, it shows that May had a choice on whether to accept such a deal -- which even she says is not perfect -- and she took a “political decision” to agree to it.

The Irish backstop is the part of the Brexit agreement designed to ensure there is no need for checks on goods crossing the frontier between the Irish Republic and Northern Ireland, in the interest of maintaining peace in the region.

On Wednesday, the government released a letter from Attorney General Geoffrey Cox in which he spells out the risks directly to May. In it, he warns that the U.K. has no way “lawfully” of leaving the backstop arrangement and could be trapped inside it for “many years.”

In theory the backstop will come to an end when a new overarching trade deal between the U.K. and the EU takes effect and makes it unnecessary.

But Britain could find itself locked in “protracted and repeating rounds of negotiations” in the future, Cox says in his letter. “Despite statements in the Protocol that it is not intended to be permanent, and the clear intention of the parties that it should be replaced by alternative, permanent arrangements, in international law, the Protocol would endure indefinitely until a superseding agreement took its place in whole or in part,” Cox’s letter says.

The risk of being trapped in the backstop must be weighed against the “political and economic imperative on both sides” to agree to a new trade deal, he says. “This is a political decision for the government.”

Fox Refuses to Say if There’s ‘Plan B’ (11:35 a.m.)

Testifying to lawmakers on Wednesday, Trade Secretary Liam Fox repeatedly refused to be drawn when asked if there is a “Plan B” if May’s Brexit deal is rejected by Parliament next week.

The risk, he said, is that Brexit doesn’t happen at all if the deal is voted down, with defeats for the government in parliamentary votes last night showing that the Remain-supporting majority in the Commons is “alive and well.”

“I think there is a real danger that the House of Commons, which has a Remain majority, may attempt to steal Brexit from the British people, which I think would be a democratic affront,” he told Parliament’s International Trade Committee.

The backstop is a “calculated risk” but it is equally disliked by the EU side and more so than he anticipated, he said. “There’s a double incentive on both sides to never get there.”

But Conservative Brexiteer Marcus Fysh said it was naive to assume that the backstop would prove temporary.

“The calculated risk is a bit like putting five bullets in the chamber of a revolver and playing Russian roulette,” he said. “It is utterly stupid.”

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