The price May is paying for survival is powerlessness

She yesterday achieved the outcome most likely to prop her up – at least for the time being. But Cooper, Letwin and Bercow are waiting in the wings.

Theresa May succeeded yesterday in achieving her aim.  Of the three Brexit outcomes that could have emerged from the EU summit, she has gained the one most likely to meet her core objective – survival as Prime Minister, at least for the moment.  There is not enough time to hold a leadership election before April 12, the deadline now agreed if her deal hasn’t passed the Commons by then.  And there is no sure alternative means of finding a replacement.  A short extension best suits her abiding preoccupation: to hang on.

Of the other two possible outcomes, a long extension would have opened up the time and space for a leadership challenge.  No Deal might have kept her in office for the time being, since the response from her Ministers and Conservative could have been: all hands to the pumps.  But it might not have done – since it would also have created that space and time.  Furthermore, it could have sparked Ministerial resignations, defections to the Independent Group, and a perilous confidence vote.

In a strange kind of way, one can’t help admiring May’s ducking and diving, her evasions, her twists and turns, her deflections, her gnomic silences – the sheer inventiveness and tenacity with which she hangs on. Sometimes, she has threatened no Brexit.  At other times, such as earlier this week, she has threatened No Deal.  On Wednesday, she hurled a bucketful of verbal paraffin over just about every other MP in the House – including her own Parliamentary Party.  Late yesterday, she sought to sponge the oil from their hair and enraged faces, offering words as close to an apology as she is probably capable of speaking.

She has promised that Britain would leave the EU on March 29 over a hundred times.  She has led Tory MPs into the lobbies to vote in principle not to do so.  She has U-turned on a general election in 2017, transition migration, transition extension, putting her deal to the Commons in December, a regulatory border in the Irish Sea: we cannot bear to replicate the list in full.  Her latest about-turn, characteristically implied rather than asserted, is that we may now participate in this spring’s European elections, after all.

So evasive have been her dealings, so profuse her positions, that she was bound sooner or later to stumble across one that would work.  So it proved yesterday.  Like the majority of Conservative MPs, like the National Convention, and like the local Associations which have lined up behind the last, we have always argued that one has to be prepared to walk away from a negotiation to get a result.  The threat of No Deal should always remain on the table.

We believe that May was bluffing when she hinted earlier this week that she was prepared to countenance Britain leaving the EU with No Deal on the date still written into law.  In her elliptical way, she has pushed the idea at pro-Brexit Ministers.  She did the same to EU27 leaders yesterday.  Some of them may not have believed her.  But she seems to have sowed enough doubt to get them collectively to back off.  Emmanuel Macron didn’t veto extension.  (Neither, please note, did Viktor Orban or Matteo Salvini.)

How much more would have been achieved had she played that card at the right time and place – in other words, right at the start of the negotiation!  If Philip Hammond had been moved in the botched 2018 shuffle, as we urged just before it took place.  If a Minister for No Deal had been appointed then (ditto).  If preparations had been ramped up.  That lost chance is a tragedy with a double edge.  For May has not only threatened No Deal late in the day, but is unlikely to be able to do so again.

This is because her tactical win is wrapped in a strategic defeat.  As we write, an extension motion will presumably pass the Commons, perhaps with predominate Labour support.  But her deal is in no position to do so at a third attempt, assuming that the Speaker allows it to be put in the first place.  If it can’t win next week, it won’t be put: that surely is the logic of setting a new deadline, if it doesn’t pass, to April 12.  On paper, the option of No Deal will still exist then.  In practice, it is likely soon to be suffocated.

For with little likelihood of the deal passing; with infuriated Remainers, distrustful Leavers, an alienated Whips Office, and a Chairman of the 1922 Committe who has reportedly told May to go, she is Prime Minister In Name Only.  Yvette Cooper and Oliver Letwin are ready for a third bite of the cherry.  Their bid to take over the negotiation, in effect, failed in January by 23 votes.  A revived push at it from Hilary Benn fell last week by only two. It is very hard to believe that it will not be successful in some form a third time. The motion to revive it is already tabled.

The Speaker will ensure that it gets a fair wind. (His latest commitment to precedent is to revolutionise S024 motions – or so it appears.) The Second Referendum lobby is dropping its pretence of wanting a further vote, and is gradually revealing what has been its real aim all along: revocation.  Letwin/Cooper are more likely to steer MPs towards Customs Union membership and perhaps Single Market membership, too.  The House may not have settled on either by April 12.  But the Commons would then surely vote for another extension.

On second and final thoughts, we apologise for offering certainties, or seeming to.  Anything could happen yet.  Pro-Remain Ministers could quit.  So could Leave Ministers.  The ERG could go on strike, and refuse to vote.  The Whips’ Office could give up any attempt to stop them. Leadership candidates are raising money, announcing teams.  No Deal could somehow slip through the cracks.  But the drift is unmistakable.  May endures.  But the price she is paying for survival is powerlessness.

WATCH: The deal and the DUP. Hammond: “This isn’t about money.”

But the Chancellor suggests that there will be more money for Northern Ireland and other places in the Spending Review.

Andrew Gimson’s Commons sketch: May is now well enough to be angry

The Prime Minister is also astute enough to get Gove to make the case for Meaningful Vote Three.

Theresa May is recovering. She is now well enough to be angry, which anyone who has nursed a recovering invalid will know is a good sign.

The object of her fury is an elderly, bearded Labour Party Leader from Islington. If he were standing at the bus stop, he would look perfectly inoffensive.

But standing at the Dispatch Box, he becomes insufferable. He asks her rambling, incoherent questions, and never takes in her replies.

It is also evident he has not done his prep. “It might help if he actually read it,” she said in a cutting tone during today’s exchanges.

What document she meant, we are not quite sure. It is probably an official text of vital importance which we have not read ourselves.

But we do not aspire to be the next Prime Minister, and Corbyn does, or at least should. That is the point of the Leader of the Opposition: to be the PM in waiting to whom the country can turn in its hour of need.

May is dreadfully weak, and has just lost two votes by enormous margins, but Corbyn never gives the slightest sign that he could step in and do a better job.

Her voice strengthened as she pointed out that she wants to fulfil the referendum result, and so did he, once, but now he wants to frustrate it by holding a second referendum fixed in such a way as to overturn the result.

“I may not have my own voice,” she declared, “but I do understand the voice of the country.” Though not quite Elizabeth I at Tilbury, it was enough to flatten Corbyn.

Each week before these encounters her staff should tell her some irritating detail about Corbyn. She is better when she is angry with him.

The Chancellor of the Exchequer came on next. He began with the “cloud of uncertainty hanging over our economy”, but went on to report that the economy “is remarkably robust”. Here is another reason why the Government has not fallen.

We next enjoyed a contest between a Cavalier and a Roundhead, two parliamentarians of wonderfully different styles, each of whom has at least some of the gifts required to be PM, not that we wish to spoil their chances.

Michael Gove stood in for the Prime Minister, who sat beside him resting her voice and still looking, in profile, very fierce and aquiline, as if she would like nothing better than to seize the mouse-like Corbyn in her talons, carry him off to her eyrie and and tear him to pieces with her beak.

Corbyn, however, had fled, leaving Sir Keir Starmer to make the Labour case.

Disraeli once attacked Lord Salisbury as “a great master of jibes and flouts and jeers”, and that is the Tory tradition in which Gove belongs.

Anna Soubry, another exponent of that tradition but now on the Opposition benches, launched a furious and quite prolonged assault on the Conservative leaders, accusing them of whipping against the amendment proposed by Caroline Spelman, a former Party Chairman, and adding that this was “a shameful carry-on”.

Gove replied in his most insolent tone that she is a barrister, and “I also understand why lawyers are paid by the hour”.

Soubry rose in her wrath on a point of order and said that as a criminal barrister she was not paid by the hour, and had done a lot of pro bono work “under his cuts” – a reference to economies supposedly made when he was Lord Chancellor.

In order to show how bad No Deal would be, Gove sought to demonstrate that it would create great difficulties for farmers. The longer he went on about this, the clearer it became that the Government is intent on holding Meaningful Vote Three, an event already referred to by the knowledgeable as MV3, as if it were some rather uninspiring sports car.

Gove enjoyed baiting the Scottish Nationalists, whom he accused of “repetitious and self-serving chicanery”, and they enjoyed being scandalised by him.

Here is a minister who knows how to divert attention from whatever it is that he does not want to talk about. Another point in May’s favour is that she can see the need for quick, clever, flamboyant performers such as Gove and Geoffrey Cox.

Starmer is a gladiator cast in quite a different mould. He is a lawyer, and builds a case which is meant to impress by its massive and impregnable solidity, especially compared to the gimcrack points made by his opponents.

Mark Francois, a leading figure in the European Reform Group, intervened to accuse the Government of being intent on bringing back the Withdrawal Agreement for yet another Meaningful Vote. He bet Starmer £50, with the proceeds to go to Help for Heroes, that MV3 will take place on Tuesday 26th March.

“I don’t gamble,” Starmer said with a smile. Gambling would be at odds with his persona as the safe pair of hands. But for the time being, Brexit remains, just about, in the hands of May, with Gove and Cox as her knights errant.

The Spring Statement was destined for obscurity before the Chancellor took to his feet

Even if the headlines weren’t hogged by the ongoing Brexit votes, what could the Chancellor really announce?

It’s hard to think of a Spring or Autumn Statement which has been less-discussed before, during or indeed after it took place than today’s. Ordinarily, the preceding weeks are filled with speculation and belated lobbying, the Sunday papers contain pre-trails of policy changes, then the day itself opens with an eery calm before the Chancellor kicks off 72 hours of chaotic scrutiny and debate. In latter years, that has particularly involved a search for both a ‘nasty’ hidden in the text and for a catchy description of it (Granny Tax, Pasty Tax, and so on).

Today’s Spring Statement, however, almost took us all by surprise. More than a few people failed to spot Hammond’s big(ish) day coming up at all. It seems unlikely to dominate tomorrow’s newspapers, still less to obsess the press pack for the next couple of days or even be the major driver of the markets.

In part, that’s because of the dominance of Parliament’s ongoing struggle to honour the outcome of the EU referendum. Last night’s vote, the votes expected this evening, and yet more votes tomorrow on the question of extension are inevitably going to be box office events.

But it’s also about the reality of the Chancellor’s position. Without clarity on how – and indeed whether, if some MPs get their way – we will leave the EU, what meaning did the Statement really have? We don’t know the trading relationship the UK will have with the EU. We don’t know whether we will be free to forge our own trade deals with the rest of the world or not. We don’t know whether this or future Chancellors will be able to vary this country’s regulations over large swathes of the economy, never mind what reforms they might choose if they are allowed to do so. We don’t even know whether Philip Hammond will shortly be posting a cheque for £39 billion to Brussels or not.

Given that context, how much of the Statement ever stood a chance of really meaning anything? Economic forecasts are dicey at the best of times, and Treasury forecasts even more so. What’s more, even good ones rely on assumptions – and the Chancellor is operating without reliable assumptions truly being available to him. He already isn’t the type of orator who comes equipped with a pre-installed exclamation mark, but the circumstances offered poor foundations to make much headway at all, even if the Prime Minister wasn’t hogging the headlines with her ongoing travails.

In the event, Hammond’s fiscal moment was subsumed by the Government’s Brexit PR strategy, warning of the consequences of failing to pass the deal while holding out a “dividend” as an incentive for voting it through. I found myself thinking back to his original announcement that the Budget would be moved to the Autumn, and Spring’s statement reduced to merely a response to OBR forecasts. It would, he told the House in 2016, be “no major fiscal event”. He was certainly right about that.

Robert Colvile: Here’s what the Chancellor should do if there’s No Deal

There is room in the Budget to allow Hammond a fair amount of leeway to act. Here’s our plan.

Robert Colvile is Director of the Centre for Policy Studies.

Over the past few months, we’ve been bombarded with predictions about the consequences of “No Deal” – most ranging from the alarming to the apocalyptic.

Yet most of these analyses have focused either on the very short term or the very long: on the immediate potential for disruption at Calais and Dover, or the impact on GDP in a decade’s time.

There has, by contrast, been much less analysis of what the Government can and should do in the immediate wake of No Deal to stabilise, and ultimately strengthen, the wider economy – to maintain consumer confidence, safeguard business investment, and prevent the supply shock of No Deal turning into a demand shock, with far more debilitating consequences.

It’s true that MPs may well vote on Wednesday to “take No Deal off the table”. But they will in practice be doing no such thing. Until a deal is actually signed and sealed, No Deal will remain a possibility – unless we decide to abandon Brexit altogether, with all the calamitous consequences for our democracy, self-respect and standing in the world that would entail.

Even if Parliament delays our departure, it is unlikely the EU will permit endless extensions of Article 50 while the British political class reaches consensus among itself.

So it would be positively negligent not to think about, and prepare for, No Deal. Hence our new Centre for Policy Studies report – A Budget for No Deal. It sets out the decisions that we believe should be taken by the Chancellor, in the wake of a no-deal departure, to safeguard the economy and promote growth.

Safeguarding the economy

In that scenario, there will obviously be a major role to play for monetary policy.

What most people miss about the most apocalyptic No Deal forecasts is that they assume that the Bank of England will not respond. The ultra-pessimistic “disorderly” exit scenario devised by the Bank to stress-test the financial sector – which featured GDP plummeting by 8 per cent, unemployment rising to 7.5 per cent, and inflation hitting 6.5 per cent – actually involved tightening rather than loosening monetary policy: an act of kamikaze economics.

Given that the Bank acted to stabilise the economy in the wake of the original vote to Leave, it is safe to assume it would do the same after No Deall. But the Chancellor will also need to take decisive action in terms of fiscal policy, to maintain confidence and create the most attractive possible economic environment.

So what should he do?

In our view, the key task after No Deal is to limit the impact of any supply shock – the sudden change in how we trade and with whom – and in particular to prevent it from turning into a demand shock, in which a falling pound drives up prices and inflation, and confidence among consumers and businesses falls alongside their willingness to spend. That means coming up with ways to blunt the impact of the most widely predicted economic dangers.

Thanks to the Government’s focus on bringing down the deficit, the public finances are in remarkably good order. We suggest that this leaves room for a stimulus of £44 billion, amounting to an extra 2 per cent of GDP, to keep the economy moving without moving the deficit back into the danger zone. (Our own proposals only come to £35 billion, leaving significant cash to deploy towards a further stimulus, or other post-no-deal firefighting.)

But where should the money go?

We argue that there should be three priorities. First, supporting consumer spending – making sure voters feel they have money in their pockets even if prices rise. Second, incentivising business investment – making sure companies, and especially small and family firms, feel like they’ve got a reason to hire and invest. Third, keeping Britain open – cutting tariffs and attracting talent and trade.

Supporting consumer spending

To ensure voters have a buffer against rising prices, and feel able to keep spending, we would urge the Government to give every worker a £465 tax cut by implementing the Universal Working Income. Our head of tax, Tom Clougherty, explained the idea on ConservativeHome back in November – raising the National Insurance threshold to match the income tax allowance. This would not only compensate for any rise in prices, but act as an incentive to everyone to work.

We also need to help those who aren’t working – it would be callous, and politically disastrous, to do otherwise. That’s why we suggest ending the benefits freeze a year early, topping up the state pension, and freezing council tax. (We also argue that a temporary VAT cut, deployed in the wake of the financial crisis, would be a worse and more expensive solution – not least since many of the products most vulnerable to any post-Brexit price rises are VAT-exempt.)

Incentivising business

Britain’s economy has defied many of the gloomy pre-Brexit predictions. But the slowdown in business investment has certainly been a drag on growth. After No Deal, we need to make sure we do everything we can to keep firms here and attract new ones – and make it as easy as possible to hire and invest.

The most obvious move is to bring forward the scheduled cut in corporation tax to 17 per cent. A more lasting change would be to adopt “full expensing” – effectively, to allow companies to write off all investment in plant and machinery against tax. All the evidence is that this would have a galvanising effect on growth.

Small and family businesses, especially exporters, are the most vulnerable to No Deal shocks – but also the most important as an engine of job creation. So we suggest a temporary 25 per cent cut in both business rates, that perennial bugbear, and employers’ National Insurance Contributions.

But it’s not just about money. We need to make it clear to businesses that the business environment will be as friendly as possible. That means imposing an 18-month moratorium on any new regulations that increase the business burden – and pausing “Making Tax Digital”, the latest headache imposed on small firms by HMRC.

It also means an urgent review of existing regulation, especially that imposed by Europe, and listening to businesses large and small about what is causing the most problems. The think tank Open Europe has outlined “politically feasible” deregulation that could save firms nearly £13 billion a year post-Brexit, or 0.6 per cent of GDP.

The Government should also bring forward cost-effective infrastructure projects – those small-scale, easily deliverable projects that offer maximum bang for its buck – and support housebuilding and construction, not least because we desperately need the homes anyway.

Keeping Britain open

The early reports on the Government’s customs plans in the event of No Deal are along exactly the right lines – a bold ambition to reduce or eliminate tariffs in order that consumers feel the benefits. Of course, there will be sectors and regions, such as agriculture, where immediate unilateral reduction would cause significant damage – so they need to be supported as we move towards a zero-tariff norm.

To keep things moving at the border, we should wave through low-risk imports from the EU. But we should also invest in developing the most efficient customs infrastructure in the world, and establish systems to help our firms export (especially SMEs).

We should also rapidly establish a new generation of free ports – a brilliant post-Brexit project first outlined by Rishi Sunak MP for the CPS.

We should make it far easier for the highest-skilled workers to come to the UK. And we should copy the Netherlands by offering the best workers, and the best firms, significant tax breaks if they relocate to the UK.

Making the best of Brexit

In a recent ComRes survey, the public agreed by 65 per cent to 13 per cent that “After Brexit, the UK should position itself as the lowest-tax, business-friendliest country in Europe, focused on building strong international trade links”. This was backed not just by Leave voters but by Remain voters, Labour voters, and across all age groups, regions, and class statuses.

The ideas outlined here fit that brief – and there are plenty more in the paper itself. Many of them, we believe, are good things to do whatever the eventual form of Brexit.

Yes, our report is a plan for No Deal. But it is one that involves doubling down on the best and most entrepreneurial aspects of the British economy. Whatever the nature of the final Brexit outcome, it is the extent to which we embrace those values that will determine whether we succeed or fail.

The Prime Minister has less than a week to save her Government

If she fails again next Tuesday, she risks the legislature becoming, in effect, the executive – and seizing control of the Uk side of the negotiation.

Next Tuesday, the Commons is due to hold a “meaningful vote” on the Government’s Brexit plan under the terms of the EU Withdrawal Act.  As matters stand, it will be presented with the same one that saw the biggest defeat for a Government in modern times, and the biggest backbench revolt by Conservative MPs in modern times.  Theresa May will be no more fortunate second time round unless Labour abstains or there is a sea-change among Tory backbenchers.  Neither is remotely likely.

If she loses, there is some suggestion that the Government will seek to bring the deal back in the event of a relatively narrow defeat (however defined).  However, the Prime Minister pledged in February that in the event of her deal being defeated in the Commons next Tuesday, the House will hold a vote on No Deal the next day and, if that proposition is then also defeated, will hold a vote on extension the day after.

It is possible that all three routes will be rejected, but as we write the most probable outcome is that the Commons votes against May’s deal, then against No Deal, and then for extension.  The logic of her position is that free votes will be granted next Wednesday and Thursday if they happen.  Whipping either way on either motion would bring resignations in its wake, and the Prime Minister’s main political objective at present is to avoid these.

If the House votes for extension, the EU will then respond.  As George Eustice, who writes on this site today, said in his resignation letter, this is likely to lead to “a sequence of events culminating in the EU dictating the terms of any extension requested and the final humiliation of our country”.

Whatever the terms and conditions of any such extension, May will then have either to concede indicative votes (as Philip Hammond and other have suggested) or have them forced on her by the Commons via Oliver Letwin and company.  Either way, the legislature, not the Executive, would in these circumstances be conducting the negotiation, in effect, rather than judging it – a constitutional unknown.

We concede that possibility and likelihood are doing a lot of work in this analysis.  It is still possible that No Deal somehow slips through the cracks – not because Parliament votes for it, but because there is now a legislative presumption of leaving on March 29, and there may be some procedural twist that is unanticipated.  But it is hard to avoid the conclusion that the Prime Minister has less than a week to save what shreds of authority still cling to her and her windswept Government.

WATCH: Hammond – Knife crime important “but there are many other demands” on limited funds

“My job is to make sure that in dealing with an issue like this we use public resources in the most effective way.”

Thawing the benefits freeze

There is a strong case for altering the balance of welfare spending between working people and those retired.

The benefits freeze has at least three striking features.  First, there is timing. The best time to introduce it, in retrospect, would have been 2010, not 2014 – in other words, at the start of the Coalition’s term, when voters were relatively likely to give a fair wind to measures that would help to reduce the rate of public spending, such as the pay freeze.

Second, there is an oddity that has nothing to do with the Government and everything to do with Jeremy Corbyn.  It is not often grasped that he didn’t propose to lift it in his election manifesto two years ago.  Yes, Labour proposed to scrap benefit sanctions and the spare room subsidy.  But there was no promise to end the freeze.

Finally – and as with wage freezes – it’s easy in, not easy out.  The freeze was originally introduced for two years in 2014.  It was then doubled to four years in 2015.  Privately, Amber Rudd wants rid of the freeze and, publicly, says that it won’t be renewed in 2020.  But one never knows: in the now unlikely event of a No Deal Brexit, there may be additional need for public spending restraint.  Philip Hammond will make much of that when the Budget comes.

The deficit is now only 1.8 per cent of GDP – Osborne slowly ground it down during his terms as Chancellor – and, for all the Chancellor’s denials, ending it altogether is being pushed off into the never-never.  The question is that follows is whether Hammond should look to lift the cap early as the Work and Pensions Select Committee recommends.

Elsewhere on this site today, Mark Wallace writes about pressures on public spending over policing and crime.  That’s a reminder, were it needed, that there should never be a let-up on control.  But the long-term, relatively unaddressed challenge is in relation to health and pensions, which together consume roughly a third of public spending.

The point about the benefits freeze is that it covered payments for people of working age – including part of the employment and support allowance and, eventually, Universal Credit.  Iain Duncan Smith believed that the squeeze on working people had become disproportionate to that on retired people.  It was not the immediate cause of his resignation, but it was a factor.

This is not a good time for Rudd to be making a policy pitch, at least in terms of gathering party support, because her flouting of collective responsibility over Brexit sours her pushing of any other policy elsewhere.  However, it doesn’t follow that she is wrong in this case.  There is a strong case for altering the balance of welfare spending between working people and those retired.

Our survey. Next Tory leader – Johnson is top again. Here’s why he’s in pole position with minimum effort.

It is striking how little the former Foreign Secretary is doing to maintain his lead. Then again, he scarcely needs to stir – for the moment.

Last month, Boris Johnson led our Next Tory Leader question with 26 per cent of the vote.  This month, he is top with 24 per cent.  Dominic Raab was second with 12 per cent; now he is second with 13 per cent.  Michael Gove was third with nine per cent; this month, he is third with ten per cent.  The mass of potential candidates on single figures ratings continues.  These changes are footling.

It is striking how little the former Foreign Secretary is doing to maintain his lead.  This morning sees his weekly outing in the Daily Telegraph, in which he has pop at the apparently forthcoming Bloody Sunday prosecutions.  Most weeks, it rages against the Government over Brexit.

Otherwise, he is, by the standard of such a master of self-projection, withdrawn.  Although he is not absent from Brexit-related proceedings in the Commons – he quizzed the Prime Minister during her statement of February 12, for example – he is not at the forefront of them either, like say Yvette Cooper or Bill Cash.  For example, he didn’t participate in last week’s debate.

Nor does he appear on BBC Question Time or Any Questions.  Indeed, he doesn’t seem to like being on a panel, and expose himself to the scrutiny of other members, or the chairman, or the audience.  (Though he performed robustly in during the EU referendum TV debates.)  His preferred forum is the big set-piece speech, like that he delivered at last year’s Party Conference ConservativeHome fringe event.

So what is going on?  This site’s tentative answer is that the main obstacle to Johnson’s ambitions is not the voters.  Nor (clearly) is it Party members.  It is Conservative MPs, who may not forward his name to those members for the final stage of a leadership election.  Which is why his priority at present is wooing them.

In the meantime, activists’ confidence in the coherence of the Government is low, and this lowers the ratings of potential rivals.  So the former Foreign Secretary is able to sit it out, enjoying his regular double digit lead in this survey, with other polls also showing him in the lead.

The Daily Telegraph is many party members’ broadsheet of choice, so that weekly column is enough to remind them he’s still alive and kicking.  His main opponent is not hostile MPs or disillusioned Remain voters or Cabinet members.  It is the passing of time – and the prospect of someone else, someone new emerging who is less divisive, less scarred.