The logistics of a second referendum

Support for a second Brexit referendum appears to have risen of late. According to an opinion poll released yesterday supporters of a second referendum outnumber those who oppose it by a margin of 47% to 36%. Many politicians also support this option. As I have pointed out previously, I am by no means persuaded of the merits of a second referendum because it will do nothing to heal the divisions caused by the 2016 plebiscite. In addition it will be used by Brexit supporters as yet another example of how the political establishment conspires to foil the will of the people. Nonetheless, if parliament cannot resolve the current impasse and there is sufficient public support for this option, there is no reason in principle why it should categorically be ruled out.

But the logistics of the second referendum are such that it will be far more difficult to implement than the headlines would have us believe. The Constitution Unit at University College London set out in great detail many of the issues involved, and it is worth looking at this paper for those interested in the detail. With regard to the mechanics of the referendum, the first issue is how quickly it could be done and there are there four stages which will determine the front to back timeline.

In the first stage, parliament must pass primary legislation to provide the legal basis for a referendum covering issues such as the question on the ballot paper, conduct rules for the poll and the date on which the referendum will be held. There is no minimum time for this process but it took around 7 months for the first EU referendum to conclude. The analysts at the Constitution Unit reckon that on the basis of past experience, it may be possible to reduce this period to as little as 11 weeks but this would only be possible if there is cross-party consensus. In the current environment, this is far from the case.

The second stage of the process is question testing, which normally takes 12 weeks but the UCL team suggest that it could be done in 8 if needed. Stage three is preparation for the poll, allowing sufficient time to prepare for the administration of the poll and regulation of referendum campaigners. The Electoral Commission recommends a six month period but on the assumption that the same rules apply as in 2016, the UCL team reckon this could be kept to 1 week. The final stage covers the campaign period itself which must last for a minimum of 10 weeks (no exceptions). The UCL academics reckon that a minimum of 22 weeks are required if everything goes according to plan and if some of the processes are run concurrently.

On that basis, if parliament can agree on the need for a second referendum between now and next Thursday, they just might be able to get it done by 27 June – the last Thursday of the month. If we follow a sequential process, adding up the minimum time periods gives us a total of 30 weeks which takes us into the height of the holiday season in mid-August. The front-to-back timeline for the 2016 referendum was close to a year. In my view, the odds against getting a referendum done in 2019 are quite high.

Obviously, there is no chance of getting any of this done before 29 March. Thus if the UK does want to hold a second referendum it will have to ask for an extension of Article 50. It is generally supposed that the EU will grant the UK an additional three months but this would only take us to end-June, which is not enough time to hold a referendum and deal with the aftermath. An extension beyond this date becomes constitutionally complicated. The European parliamentary elections are held in May and the new parliament will convene on 2 July. However, the UK has not planned to send any MEPs to Brussels on the basis that it will have left the EU by the time the new parliament sits. If Article 50 is extended beyond June the UK will be in breach of its EU obligations if it does not send MEPs to Strasbourg to sit in parliament. A three month extension thus runs the risk of merely postponing the cliff edge until the summer.

However, it transpires that the Electoral Commission has set aside £829,000 for "activities relating to a European Parliamentary election in 2019" which was described as a “precautionary measure.” In other words, in case the UK needs to hold an election of MEPs on 23 May. Just imagine how that will play with the eurosceptics who will probably not bother to turn out to vote. Against that, it may enthuse Remain supporters to turn out in higher numbers than usual.  Whatever the merits of holding European elections, it is the only way that the UK can press for a longer Article 50 period that would allow the possibility of holding a second referendum.

Whilst it is theoretically possible to do this, nothing that we have heard from the political establishment – even prominent supporters of the second referendum – suggests they are even contemplating this option. But if they are serious about the so-called “People’s Vote” they will have to do so. Parliamentary opposition to holding European Parliament elections in the UK will be enormous and I can’t imagine for a moment that the government will support the idea. But this could be one of the next battlegrounds in the Brexit saga, the duration of which will surpass that of the Second World War in 12 days’ time.

Another step closer to the edge

After all the frantic attempts to cut a deal the British parliament finally got down to business by voting on the Withdrawal Agreement drawn up between the UK and EU back in November. And in line with expectations parliament rejected it, but the defeat by 432 votes to 202 – a margin of 230 – was rather more emphatic than many had supposed. This is the biggest defeat that any government has ever suffered on a parliamentary vote; the previous record was the 166 vote margin registered in 1924 (chart). This calls Theresa May’s survival into question and with a vote of no-confidence in the government tabled by the opposition, which will be discussed tomorrow, we are truly in constitutionally deep waters.

In terms of what it means, the margin of defeat for the Withdrawal Agreement was so wide that there is little point in the British government going back to Brussels to try and achieve any concessions. The EU’s view is that parliament rejected the deal so decisively that there is little it can do to improve things for the UK government. Second, the risk of a no-deal Brexit may have actually risen. One of the proposed amendments this evening was one which called for a rejection of the deal but which committed parliament to ensuring that the UK did not leave the EU without some form of safety net in place. This was not called to a vote, presumably because its backer (Jeremy Corbyn) saw a tactical advantage in not doing so. Consequently, the UK finds itself looking over the edge of the cliff with just 75 days until it legally leaves the EU. This position could yet be remedied but it does not feel like a comfortable place to be.

The motion of no-confidence in the government allows all MPs a chance to vote on whether they wish to see the current government remain in office. The outcome is decided on a simple majority: If the government loses the vote, Theresa May will be forced to resign and parliament has 14 days to form a new government which is acceptable to all MPs. If that does not happen, parliament is dissolved and new election must take place. The no-confidence motion will debated in parliament tomorrow with the vote taking place at 1900 GMT. The Democratic Unionist Party, which supports the minority Conservative government, has confirmed that it will vote for the government. Providing that all Conservatives also provide their support, Theresa May is likely to live to fight another day. But a Machiavellian interpretation would be that Tory MPs vote against the current government in order to oust Theresa May and install a candidate who is acceptable to the Tories and DUP, and win on a second vote.

You can see why that might be an attractive option. Theresa May is becoming a serial loser. In times past she would have resigned and many rightly ask whether she can deliver on Brexit. She cannot get her current deal across the line, despite it being the least-worst option in terms of leaving the EU whilst supporting the economy. But she is unable to propose an alternative. Nor has she been willing to countenance postponing or reversing Brexit.

The government now has no choice but to press for an extension of the Article 50 period. If the alternative is a no-deal Brexit, which will certainly worry the EU, this is almost certain to be granted. However, it is only likely to get an additional three months because the new European parliament, which will be elected in May and in which the UK will not be represented, must convene on 2 July. It is difficult to see how the Article 50 period can be extended beyond that for all sorts of constitutional reasons. But what will the UK do with the extra time granted to it?

There appear to be four realistic options: (i) negotiate a more acceptable agreement with the EU27; (ii) a hard Brexit; (iii) call a second EU referendum and (iv) unilaterally withdraw the Article 50 notification, following the ECJ’s ruling last month. The option of a general election is not one which would resolve the Brexit conundrum and would only be a by-product of the current uncertainty, so I do not consider this as a solution.

Option (i) appears increasingly unlikely whilst (ii) is still unpalatable to most MPs (despite what happened tonight). Option (iv) would probably be seen as a betrayal of the democratic process: Even if the referendum in June 2016 was not legally binding, laws subsequently introduced give it much more force. This leaves option (iii) – a second EU referendum. There are many reasons why this is a bad idea: For one thing it will further deepen the many divisions which were laid bare by the June 2016 vote. But if parliament is unable to reach an agreement on how to deliver a Brexit without sending the economy over the cliff, it may have little choice. Parliament has had 30 months to come up with a decision on a question that the electorate was given four months to consider - and it has failed. It is clear that politicians cannot resolve the problem. Maybe it is time to throw it back to test the will of the people.

May's day turns out OK

 

To say that this has been a tumultuous week in UK politics is like saying you can get a good suntan in the Sahara. It is a statement of fact that simply does not do justice to the magnitude of events. At least we did get one meaningful vote – just not the one planned. Following the postponement of the parliamentary vote on the Withdrawal Agreement, we were treated to the spectacle of the civil war within the Conservative Party being fought in the open as rebellious Tory MPs tabled a motion of no confidence in Theresa May. Although her margin of victory was widely viewed as insufficient (200-117), she obtained 63.1% of the vote which is a larger share than in any of the 8 contested ballots in the past 43 years, bar John Major’s 66.3% when he challenged backbench rebels to unseat him in 1995 (chart).

Nonetheless, the impression remains of a prime minister who is in office but not in power. But Brexit is quite simply an undeliverable policy. Worse still, it has been hijacked by various interest groups seeking to further their own interests, all of whom have irreconcilable positions. Brexiteers simply refuse to accept that it is impossible to leave the EU on the terms that they desire, despite all the evidence to the contrary (see here for the journalist James O’Brien’s coruscating denunciation of their views). Remainers don’t always give the impression that they fully took on board the message of the 2016 referendum. Then there are the opportunists in the Labour Party who are simply using the chaos of the current situation to push their call for a general election.

Meanwhile, the world looks on aghast as the extraordinary events in UK politics continue to unfold. It has not been an edifying experience for a nation which prides itself on its constitutional stability and I have lost count of the number of times I have been asked what is going on in your country. I cannot explain it, but it was perhaps best summed up in a letter to The Times yesterday by Robert Blackburn QC, Professor of Constitutional Law at Kings College London, who wrote: “The political class has brought the present crisis over Brexit on itself by continuing to ignore the now urgent need to repair the creaking Victorian infrastructure through which our rulers continue to govern the country ... The use of an ad hoc referendum on a constitutional policy question of immense complexity, with no detailed prior examination and public dissemination of its implications across UK public life … and no parliamentary process for its approval, has exposed to the world the curiosity and embarrassment of a post-imperial unwritten political and governmental structure in turmoil.” In other words, a governmental system that is not fit for purpose.

He concludes that we need to enact the recommendations of a House of Commons Committee which “set out the case for a written codified constitution, one fit for the modern democratic era with a process through which popular deliberation and constitutional change should take place.” At the very least such an approach might act as a pressure vessel to contain the worst instincts of anti-EU populists who have infected the Conservative Party.

But now that the genie is out of the bottle it is difficult to see where we go from here. The leadership election has not resolved anything apart from drawing attention to the kindergarten antics of the inaptly named European Research Group which: (i) hates all European political ideas; (ii) clearly does no research and (iii) is a collection of disparate individuals rather than a coherent group. It is thus likely that we will continue with the plan announced by Theresa May on Tuesday in which parliament will be allowed to vote on the Withdrawal Agreement sometime before 21 January 2019. But in the absence of any significant amendments – and there is no sign that the European Commission is in any mood to reopen negotiations – MPs are likely to reject it.

But whilst nothing good will come out of Brexit, nor is there anything to be gained by calling for a second referendum any time soon let alone withdrawing the Article 50 notice. All three policy options will be hugely divisive, which is why I maintain that an extension to the Article 50 period is the least worst option. One complication which gets little airplay is that an extension of the deadline will cut across the European Parliamentary elections, scheduled for May 2019. It has long been assumed that the UK would be out of the EU by this point and will not be required to send MEPs to Brussels. If the UK is technically still a member of the EU this could cause some problems, though I can envisage a scenario in which the EU and UK arrange a fix whereby the UK is assumed to leave before the end of the parliamentary term and would thus not be required to elect MEPs.

Such a policy will buy time. But how much time will the UK need in order to pull itself together? Probably a lot more than the EU27 is likely to grant. However, I recall suggesting some time ago that one option would be to keep EU associate membership without actually leaving until public opinion has changed sufficiently to suggest that a second referendum is clearly winnable either way, thus decisively confirming or rejecting the Brexit decision. It is more than evident that politicians cannot decide what to do and unless Brussels comes to Westminster’s aid I am struggling to see how else this plays out.

Unless the Conservative Party can sort itself out, however, this issue is likely to periodically erupt every few decades. Thirty years ago, when Labour was in thrall to the left wing of the party, a series of leaders embarked on a modernisation programme which resulted in the expulsion of many of those viewed as extremists. The policy was successful in as much as Labour tacked to the centre ground and laid the groundwork for Tony Blair to claim three successive election victories with handsome majorities. Despite the current vogue for extremist policies, elections are largely won by capturing the centre ground. The Conservatives would do well to have a similar root-and-branch reform and rediscover the brio which allowed them to set the political agenda.

A house divided against itself cannot stand

The weekend march in London in favour of a second Brexit referendum sent a signal that parliament would be wise not to ignore. According to the organisers, around 700,000 people ventured out onto the streets to demonstrate their support for a vote on the final terms of the Brexit deal. Unlike in 2003, when they estimated that 750,000 people took to the streets to protest against Britain’s involvement in the Iraq War, police refused to put a figure on Saturday’s crowd. Suffice to say, however, the People’s Vote march was one of the biggest popular rallies on the streets of the UK’s capital city.

I don’t wish to be a spoilsport, but it is unlikely to succeed in its objective if past history is anything to go by. In the early 1960s, popular marches against the deployment of nuclear weapons attracted crowds of up to 150,000 – pretty good going in pre-social media days – yet the UK still continued to deploy them. The violent poll tax riots in early-1990 did not prevent the government from going ahead with the introduction of a local flat tax, although it perhaps did undermine Margaret Thatcher’s position as prime minister and she was forced to resign later that same year. And as we all know, the UK soon became embroiled in the Iraq War despite significant opposition at home.

So how should we interpret major expressions of public support? It is difficult to argue with certainty that the weekend protests represent a significant shift in wider public opinion as the 2003 experience shows. Although people recall the anti-Iraq War protests as suggesting that the majority of the electorate was opposed to military action, YouGov conducted a series of 21 polls between March and December 2003 which showed that 54% of respondents believed it was right to take military action against Iraq. What is even more interesting is that polls conducted in 2015 suggested that only 37% of respondents say they believed military action was right at the time. This is a form of cognitive bias best described as consistency bias in which past attitudes are incorrectly remembered as resembling today’s attitudes.

Perhaps it is more accurate to say that big demonstrations such as those against Brexit or military involvement in Iraq represent a commitment by a passionate minority on a topic where society is genuinely split. It could, of course, be the case that public opinion has shifted on Brexit: After all, the opinion polls clearly suggest that those believing the UK made the wrong decision two years ago now outstrip those who believe it to be the right decision by a good five percentage points. But that does not mean the government will change its mind. Indeed, as I noted here, it is almost impossible to conceive of a second referendum any time soon on the grounds of democratic legitimacy.

Moreover, we have less than five months before the government is due to leave the EU, and Christmas is coming up fast. It is logistically difficult to imagine that the government will be able to pass the necessary parliamentary legislation and conduct any form of information campaign before the UK leaves the EU on 29 March 2019. As the lawyer David Allen Green has pointed out, “referendums on a UK-wide basis sit badly with the UK constitution” because while a mandate derived from a general election is a weak one (parties can simply ignore their manifesto commitments) a mandate derived from a referendum is a different beast. A second referendum merely gives us a second opinion. Which one should we choose? In Allen Green’s words, “what if the further referendum is on a lower turn-out?  Or a different majority? Which mandate takes precedence?” And as I have noted previously a second referendum would take place in an divided country which would exacerbate already-inflamed tensions.

Much as it pains me to say it, I cannot see a second referendum as being the answer to Brexit divisions. So how should they be dealt with? Perhaps the best option is for the government to push for the softest possible Brexit and dare the hardliners to challenge them: Keep the UK as closely tied to the EU as practicably possible in the hope of minimising the economic damage. Indeed, to all intents and purposes keep kicking the can down the road by finding ways to delay a full Brexit. It would, of course, provoke a dreadful row within the Conservative Party. But it was Abraham Lincoln in his famous 1858 speech, quoting from St Matthew’s Gospel, who asserted that a house divided against itself cannot stand. Brexit is really an internal Tory party matter which is never going to be resolved by compromise. This particular divided house may need some bloodletting.

Self-inflicted wounds

It has become clear over the last twelve months how woefully unprepared the British government is to negotiate an exit from the EU. As the play in the theatre of the absurd continues to unfold, we are faced with the prospect of the British government having to take steps to secure food supplies in the event of a no-deal Brexit, which has lit up social media sites with posts displaying a mix of trepidation and withering scorn. As more than one person has commented, we appear to have gone from “Vote Brexit to save £350 million a week” to “Vote Brexit and we will ensure that the food doesn’t run out.”

Against this backdrop the latest missive from the brains behind the drive to sign new trade deals – none other than trade secretary Liam Fox – arguing that ‘No deal’ is preferable to delaying the Brexit process is beyond stupidity. You may recall a year ago, Fox claimed in a radio interview that “the free trade agreement that we will have to do with the European Union should be one of the easiest in human history.” This is the same Liam Fox who said two years ago that “we're going to replicate the 40 EU free trade agreements that exist before we leave the European Union so we've got no disruption of trade.” With seven months before the UK leaves the EU, let us consider how many of those trade deals Fox has actually signed (clue: It’s an integer less than one). So you will forgive me for not taking Fox’s latest assertion at face value that “extending Article 50 is the definition of failure for the government.”

Fox went on to say that “The public have told us, it wasn’t a consultation, to leave the European Union, and the public already wonders why it’s going to take more than four years after the referendum for us to fully remove ourselves from the EU. To attempt to extend our membership even longer, many voters would regard as a complete betrayal by the political class.” So where to start with this one? How about the fact that the referendum was in effect a consultation – it certainly was not legally binding. And why is it taking four years? Because it is a difficult process and one which if rushed will lead to far worse outcomes than are necessary. The biggest betrayal of all would be to sell out the public in order to deliver a Brexit which leaves people worse off. And if he thinks people are angry with the way politicians have handled Brexit so far, wait until it is bungled.

Another of the Brexit-at-any-price brigade, Daniel Hannan, yesterday told readers of the Daily Telegraph “Let’s call the EU’s bluff and prepare for a no-deal.” Hannan’s argument relies on the old nonsense that “they need us more than we need them.” This is simply wrong. Around 47% of UK exports are destined for the EU27 with only 16% of EU exports headed to the UK, and the Telegraph is guilty of peddling fake news by suggesting otherwise. You can argue, as Hannan does, that the EU is being unreasonable in its approach, and we can look at that another day. But all sane commentators knew that the EU held the whip hand in negotiations and expecting it to act in any other way than to look after its members interests denotes irresponsible levels of naivety.

There is nothing new in any of this, of course. I think the Brexit ultras are wrong and they believe me to be a Remoaner, afraid of looking to new horizons. So let’s have a look at some evidence. Over recent months I have been looking at gravity trade models of the UK to assess the impact of a hard Brexit (the final results are likely to be published in a few weeks’ time). On my estimates, a no-deal Brexit will cost around 8% of UK export volumes and impose a hit of 3% on imports. With exports falling more than imports, this implies a one-off reduction of 1.5% in GDP. That may not sound like a lot but if we impose these results on a structural model and run them over a 15 year horizon, we end up reducing real GDP by 4% relative to baseline and real incomes by 3%. As a result unemployment rises and public finances turn out significantly worse than they would otherwise be. I can’t find the Brexit dividend to fund higher NHS spending (neither can the OBR). 

With support for a second referendum apparently mounting, the whole Brexit debate is reaching a tipping point. I have to stress that I am no great fan of this idea although I don’t buy the will of the people nonsense (remember, only 37% of eligible voters opted for Leave). But the decision to leave the Single Market and Customs Union is economically crazy and was certainly not on the ballot paper. However, if Theresa May continues to believe that this is what people voted for, then a second referendum may indeed be required to check whether it really is “the will of the people.”

I do wish there were more important things to write about but Brexit appears to have become an all-consuming part of this blog. However, it is THE economic question of my lifetime – and it is being driven by ideological politics. But as the journalist James O’Brien put it, “The one thing I still can’t quite get my head round: It’s optional. It’s a choice. It’s voluntary.”