Big 'end state' Brexit discussion looming for PM

Philip Hammond, Boris Johnson and Liam Fox in Downing Street Image copyright PA
Image caption There are different views around the cabinet table about how close the UK should stay to the EU

The chancellor confirmed to MPs what has been widely known in Westminster for a long time.

Regular readers will know that from time to time I have ranted on about it here.

But Philip Hammond told MPs on Wednesday afternoon that indeed, it is the case that the cabinet has not yet had its big bonanza conversation about the "end state", when the prime minister will have to put her cards on the table finally, and explain the kind of relationship she wants with the EU after we leave, and after the transition period.

She will then have to try to persuade her cabinet colleagues to back her view.

It is a conversation that she has delayed for months, holding it back because she knows the cabinet is divided, and bringing them together could be extremely hard.

It boils down to this. Ministers like Boris Johnson and Michael Gove believe that Britain's future lies in striking out on our own, out of reach of most of the tentacles of the EU's institutions.

It is an over-simplification, but to explain the difference, you can point to the deal that Canada did with the EU, a free trade agreement essentially, where there is co-operation and collaboration to make it easy for business.

But there is nothing like the current situation - whether that's on immigration, rules for industry or the legal system. There is a strong and significant faction inside the Tory party that agrees with them and are extremely well organised and willing to make trouble if they see that possibility being undermined.

That's what explains the co-ordinated cage-rattling by Brexiteers since the first phase deal fell apart on Monday afternoon.

But there are others in Theresa May's team who think the best thing for business, and the best thing for the country is to mirror the EU's arrangements as far as we possibly can. The idea is that even though we will have left the EU, we preserve as much of our trading relationship as possible, even if that means continuing to be bound by many of the EU's rules and routines in all but name.

Again, it's a generalisation, but a relationship like Norway and the EU where they have very close ties (but not much influence) gives you a rough idea. Theresa May always says that she wants a "bespoke deal", but you can get a sense of the two different kinds of options here.

'High or low'

The technical term in Whitehall for the competing visions is "high or low alignment".

While the government disputes that it is only a choice of one or the other, politically in the Tory party it is a question of two "sides". And so far, the prime minister has avoided coming down completely on one side or another. Talk to ministers on different sides privately and they both seem to think Theresa May agrees with them, although they can't be completely sure..

There are intensely strong feelings in both camps, and so far, Theresa May's way of broadly avoiding arguments has been not to have the discussion.

Essentially what could be an enormous row, that might even end up with some members of the Cabinet resigning, has been postponed, rather than resolved.

Image copyright Reuters
Image caption Allies of the PM point to wording in her two major speeches on Europe since becoming leader

But the crisis over the DUP has tightened the valve on what's a political pressure cooker. Because, to use the jargon, that dispute is essentially about 'alignment'.

The problem of Northern Ireland is the DUP's deep discomfort that Northern Ireland could be more closely aligned to the rest of the EU, and Dublin, than the rest of the UK. Basically, they don't want to be pulled more tightly to Dublin than to Westminster. It is its own deeply important, and sensitive, issue.

But it has forced the question of alignment more generally out into the open. And it's the first time the truce on the issue has been tested. How closely 'aligned' should the UK really be outside the EU?

The prime minister had to make a call over the weekend to get to a potential deal to move on to the next phase of the Brexit talks.

But the way that deal held out the possibility of "high alignment", was simply not acceptable to many people in her party, as well as the DUP.

Ideological disputes

So now, the time is coming, and coming soon, when she will have to answer the question she's avoided answering in detail for many months. And the discussion she has been postponing in Cabinet for over a year.

There's a good reason. It's been to keep a lid on the ideological disputes that she knows exists.

On Wednesday afternoon Number 10 confirmed officially that the cabinet would have the discussion before Christmas. Her allies point again and again to the clues that she has given in her big interventions in the debate - whether the Lancaster House speech or her address in Florence.

On the question of alignment, sources in the Department for Exiting the European Union say that she made her position plain with this simple passage.

"There will be areas which do affect our economic relations where we and our European friends may have different goals; or where we share the same goals but want to achieve them through different means.

"And there will be areas where we want to achieve the same goals in the same ways, because it makes sense for our economies."

But the carefully constructed phrases she has put forward in her major speeches about Brexit have been, in a sense, sophisticated sticking plasters.

They have set out generalities, not specifics, and whether the implications were misunderstood or just ignored at the time, the reality of having to make actual decisions as the negotiations progress mean that sooner or later, she will have to rip them off.

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