Brexit

Leadsom’s Withdrawal Means May is PM

Theresa May will succeed David Cameron as Prime Minister following Andrea Leadsom’s withdrawal from the race. The shock announcement has created uncertainty about precisely when and how the transition will now take place. But all indications are that May will become PM in a coronation that seems likely to occur much sooner than the original 9 September timetable – possibly within days.

[Source: UK Home Office]

The haste and nature of her election may cause some discomfort. May had wanted to triumph in a contest and the delay in taking over until September was helpful in calming calls for immediate progress to be made in triggering Brexit. Her early emergence as PM means that those questions will come into immediate focus.

Tellingly, Andrea Leadsom’s resignation letter stated that a nine-week leadership campaign was undesirable for the country and urged the next PM to set out a clear plan for Brexit and a clear commitment on the rights of EU citizens currently residing in Britain to remain.

As well as heaping pressure on the new PM to outline a road map to Brexit, Leadsom’s departure from the Tory race is likely to heighten calls from some quarters for Theresa May to secure a democratic mandate through an early election.

May’s domestic agenda takes shape

‘A Britain that works for everyone’ was May’s key strapline and her overall tone in recent days has sought to show that she is best placed to translate the lessons of Brexit into cogent policy commitments.

Earlier today she announced policies aimed at clamping down on executive pay by allowing shareholders to veto remuneration deals and by putting workers on boards. Some will say that May is moving onto Labour ground but there is an acknowledgement that being seen to back ‘big business’ is politically dangerous for the Conservatives in a post-Brexit world. The vote has been interpreted as a rejection of both the political and business elites. Today’s Daily Mail screams ‘May declares war on the fat cats’ and that may be exactly the headline she is looking for.

May’s domestic policy agenda

Home Secretary Theresa May set out her pitch for the Conservative leadership, as well as her agenda for the country as Prime Minister, in a speech in Birmingham. She stressed the need for a vision for the future of the UK, unity in the party and country, and the importance of strong and proven leadership. May’s key points were:

  • The UK will definitely leave the EU under her leadership, rejecting calls to defer or annul the process.
  • Opportunity for all, with improved life chances of the poor and disadvantaged.
  • Security in terms of employment, housing and education.
  • Rebalancing the economy away from London.
  • Raising productivity.
  • Creating Treasury-backed ‘infrastructure bonds’ to support major projects.
  • Overhauling corporate governance including employee representation on company boards, shareholders being able to veto executive pay arrangements, and an industrial strategy to prevent the sale of strategically important UK businesses to foreign buyers, especially those with a ‘dubious track record’.
  • The Government should be able to ‘defend a sector that is as important as pharmaceuticals is to Britain’.
  • Clamp down on corporate tax avoidance.
  • Reform competition law so that ‘markets work better for people’.
  • A major housebuilding programme to curb price rises and make home ownership affordable for young people and those who do not inherit wealth.
  • During a question and answer session, May suggested that ending free movement of people should take priority over single market membership. She also stated that even if the public mood appeared to change during the process, the people had spoken, implicitly rejecting the idea of a second referendum.

 

Tories boxed in on free movement

Top of the to-do list for Prime Minister May is the need to negotiate access to the single market as part of the Brexit negotiations. However, while the Tory contest lasted she sought to appeal to the base with commitments to control freedom of movement. But, as various politicians and officials in Europe have emphasised, that is not compatible with full and unfettered access to the single market.

Hence many commentators, including George Osborne’s former chief of staff, believe that the UK is heading for watered down version of the Norwegian model – an ‘EEA minus’ where Britain gets “a bit more immigration control and a little less single market”.

David Davis sets out his Brexit vision

That is broadly in line with the position set out on Conservative Home this morning by David Davis MP – who according to weekend briefing may head a Brexit Department under Prime Minister May.

In a remarkably upbeat assessment of Britain’s post-EU economic future, Davis said that UK growth has been built on uncontrolled mass migration which “has made the economy bigger, but not necessarily better for individual citizens”. Brexit, he says, affords an opportunity to “shift our economy towards a more export-led growth strategy, based on higher productivity employment”.

In terms of the single market, Davis believes that continued tariff-free access is the most likely and desirable outcome but says that if the EU does not agree then Britain can use levies on for example car exports to support our own industry.

Towards a new industrial policy

Significantly, Theresa May this morning spoke of the UK needing a “proper industrial strategy”. That raises the prospect of new leadership at the Business Department and a more active approach than we have seen in recent times; one in which state aid rules are relaxed and subsidies can be made available to certain sectors to stay or relocate in Britain.

Davis acknowledged that time needs to be taken to prepare for the EU trade negotiations and says “this is one of the reasons for taking a little time before triggering Article 50.” But the pressure on May to start that process in quick order will now be heard in both Brussels and within parts of the Tory party and the Brexit right.

By Lexington Communications