18/01/2017 04:22 GMT

The Waugh Zone January 18, 2017


The five things you need to know on Wednesday, January 18…

theresa may


It’s PMQs day again and Brexit will loom large. Of course, Jeremy Corbyn loves defying expectations and could ask about school cuts, child poverty or his new smallnumberofincidents.com website about NHS problems (a Theresa May quote from last week’s bout).

But May’s big gamble on Brexit hardball will be surely unavoidable. I’ve already written HERE a WaughZone special on what will surely come to be known as The Lancaster House Speech. The touches of Thatcher, the lack of detail on immigration, the near-impossible demand of a two-year trade deal are all in there.

Unlike a Budget which can be unpicked within hours by the IFS, it may take weeks, months or years for the PM’s plan to unravel, if at all. And as David Davis pointed out yesterday, the speech IS the plan. There’ll be no White Paper on Brexit.

Following up on May’s ‘deal or no deal’ warning, DD suggested yesterday that if the EU27 failed to be flexible, falling back onto WTO rules was not a threat, but a promise. May’s central calculation is that Germany won’t want to harm its car and other industries by failing to give us a good deal. No wonder Nigel Farage tweeted: “I can hardly believe that the PM is now using the phrases and words that I've been mocked for using for years. Real progress.”

After the tough talk of yesterday, DD was more emollient on the Today programme, claiming May’s speech was ’80% positive’, preferring ‘partnership’ to threats. But the threat remains, as does his optimism. Put to him that the transitional phase could last five years, he said ’I doubt it’.

The pound rallied on the certainty. As WPP chief Sir Martin Sorrell told the BBC early this morning: “businesses can now plan for the worst”. HSBC’s Stuart Gulliver said overnight 20% of his London staff could move to Paris. And JP Morgan, in a note to investors, warned the customs union withdrawal was “very dangerous”. “Significant parts of the UK service sector would, under these conditions, lose their ability to provide services to EU-based counterparties overnight”.


Davis pointed out that EU Council President Donald Tusk had described the PM’s plan as ‘at least more realistic’. Brussels chief Jean-Claude Juncker will give his first response to May’s speech today. Juncker is in many ways the perfect pantomime villain for Brexiteers (indeed his inflexibility helped fuel last year’s Leave vote) and the PM knows she can blame him and others if she fails to get what she wants. Politically, that will be powerful defence back home should a deal fall apart.

Remember that after Ken Clarke described May as a “bloody difficult woman” last year, she turned it to her advantage in the Tory leadership hustings. To cheers from Tory MPs, she said Juncker was about to find out why. British officials believe Switzerland has been ‘bullied’ by the EU in recent months, a fate that May just won’t allow to happen to the UK.

Some European reaction to Maggie May’s threats was robust. German paper Die Welt headlined them ‘Little Britain’. Jan Philipp Albrecht, a German Green MEP, tweeted: "May: Go f*** yourself EU but please don't let us down. *whine* *whine*”. Others still couldn’t fathom it all. Alain Lamassoure, a French MEP from the centre-right Republicans party, said that Britain’s decision to leave the single market was “business suicide”.

What surprised many was May’s decision to put defence and security on the negotiation table, linking them to the EU deal. No10 said there was no intention to withdraw intelligence cooperation, but why raise it at all? “If I were Merkel, I would not respond well to that,” James de Waal, senior fellow at the think-tank Chatham House, tells the FT.


For May’s political opponents, inside and outside the Tory party, her speech left a mixture of confused responses. Remainers like Anna Soubry and Nicky Morgan followed Keir Starmer’s lead in welcoming the attempt to take the hard edges off Brexit. But Stephen Dorrell emailed pro-EU Tories this morning to declare “it's worse than we feared”.

Within Cabinet, the Brexiteers’ broad smiles were proof they had got what they wanted. Boris allies tell the Sun: “This is his victory over the Treasury on the major policies.” Treasury sources hit back that Philip Hammond won a major concession with a transition phase to ease any cliff edge.

And many Labour MPs in the north feel they will be squeezed even more. Emily Thornberry struggled on Channel 4 News last night to say whether Jeremy Corbyn would demand a general election if May didn’t deliver his ‘bottom lines’, as suggested in the Sunday Mirror (his actual quote was “Sorry, but we live in a democracy and the Government has to be responsive to Parliament).

Talk of a snap general election persists only among a small number of Tory backbenchers, but a general election if the final Brexit plan is voted down is very much alive. One Cabinet minister told The Sun: “The PM knows she always has the voters up her sleeve, and she wants to keep them there. If Parliament tries to block the deal she has brokered and recommended, she will then go to the country.”

Davis suggested on Today that any vote would not be binding, merely that the Government would “have to pay attention” to it. As well as the Great Repeal Bill (which is far from straightforward), the Brexit Secretary also revealed “this will not be a single vote it will be a series of votes” on major law changes, before the final ratification.

As for the PM, she knows she could get a further poll bounce once she triggers Article 50. One of the most telling lines in Gove’s Trump interview was when the President Elect asked how May was doing back home. “She has very strong approval ratings,” Gove said. From a man who knows his own popularity is pretty low, that sounded like it was said through gritted teeth.


Watch Trump’s nominee for Education Secretary as she’s asked why she said state schools ‘suck’.


Maybe it takes a bluffer to know a bluffer. But one real consequence of May’s tough talk on Brexit is that it will force Nicola Sturgeon to make a decision on a second Scottish independence referendum. The First Minister hinted that the hardball plan made indyref2 ‘more likely’, yet many in Whitehall wonder whether she will really risk calling a vote with the polls still showing no sign of an uptick for independence.

With 62% of Scots voting to remain in the EU, and having been told in 2014 that staying in the UK guaranteed a future in the EU, the SNP knows the future of the Union rests on this. MP Peter Grant said in the Commons that if May “insists on giving Scotland only one option to remain in the European Union, Scotland will take that up.”

But there’s another huge Celtic issue with just how May can deliver her ‘practical solution’ to maintain the common travel area with the Republic of Ireland. The PM vowed no return to the borders ‘of the past’. Martin McGuiness tweeted that "a border of the future is coming at us” and he’s probably right. No10 sources talked of ‘technological’ solutions to the conundrum of ending a common external trade tariff while not having a ‘hard’ border with Ulster.

Speaking of bluffs, will Julian Assange now agree to extradition to the US, given that’s what he promised the other day if Chelsea Manning was shown clemency? Some would rather see him face a Swedish court on sex charges instead first.


As if to prove May’s line that there’s more to her government than Brexit, Justine Greening will today unveil six more “opportunity areas” (one of the newest euphemisms for ‘education blackspots’) that will share a £72million cash boost for the poorest children. Bradford, Doncaster, Fenland & East Cambridgeshire, Hastings, Ipswich, and Stoke will get better teacher support, schools, career advice, mentoring and apprenticeship chances, the Sun points out.

But it is slowly dawning on many parents and teachers that other schools are facing cuts, and that’s why the slo-mo Tory revolt over the funding formula is one to watch (more than a watered down grammars plan). The Guardian ran a little-noticed but worrying report on heads revealing job cuts to teaching assistants, admin staff, mental health counsellors and replacement teachers. The NAO says schools face real terms cuts of 8% by 2019/20.

And with fresh warnings about social mobility, there’s a new report from the End Child Poverty Coalition, declaring that inflation outstripping child benefit and other changes will leave parents £2,800 a year worse off. There’s a ‘poverty premium’ for being the very poorest too.

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