By Claire Davidson, Davidson Ryan Dore
With just under one month having passed since the EU referendum, Claire Davidson from Davidson Ryan Dore, a strategic communications consultancy working alongside Hogan Lovells on matters relating to the UK withdrawal from Europe, explores what the shape of the new Prime Minister's Cabinet might mean for the Brexit negotiations.
Not all ministers were created equal
The Cabinet assembled by Theresa May has seen the appointment of many new faces with some of the old guard still there to ensure continuity. The Prime Minister's choices reflect two very clear goals: listening to the will of the people on 23 June 2016 by exiting the EU; and delivering economic reform through renewed industrial expansion, reduced reliance on the services sector and social justice.
The make-up of the cabinet of Brexiteers and Remainers and their positions points out what May’s “Brexit means Brexit” really means.
The Three Brexiteers
It is not only new business cards but also new door signs being printed in Whitehall. The shake-up of the Foreign & Commonwealth Office has drawn the most interest, with the creation of new Secretaries of State to deal with Brexit: David Davis for Exiting the European Union – and Liam Fox for International Trade – leading to a somewhat diminished role for the new Foreign Secretary, Boris Johnson. The Prime Minister has definitely chosen "horses for courses". There is no doubt that the Brexit and Trade departments will deal with the technical and ultimately very detailed needs of complex trade and statute negotiations suiting the styles and skills of both ministers. Although he will still retain oversight of some of the most sensitive instruments of the state, the Foreign Secretary will be responsible for keeping the UK prominent in the world scene and enable a parallel track for the country so that it does not get subsumed in Brexit to the detriment of its global role. His Twitter feed over the last three days as the UK responds to the dual crises in France and Turkey reflects this.
Boris, Liam and David are truly the come-back kids, albeit some sooner than others. All three have previously held prominent posts on the EU and world stage – London Mayor, Secretary of State for Defence and Minister of State for Europe, respectively – giving them a good understanding of the workings of foreign affairs, trade partnerships and immigration.
Despite all being Brexiteers and big beasts in the Conservative Party, what else this trio have in common is rather less obvious. They will need to cooperate seamlessly and complement each others' work to play the game of multidimensional chess of exiting the European Union, negotiating new trade deals with non-EU states, and maintaining cordial relations with key allies, not least those across the Channel. The price of failure would not just be personal. The Brexiteers' camp in the new Cabinet will be forced to put their careers where their campaign slogan was during the Referendum campaign. If negotiations fail, the Prime Minister cannot be accused that it is because those at the negotiation table were not truly committed to leaving the EU.
Swifter than expected Prime Ministerial succession has left the fate of the "Brexit Unit" created by the now-departed Chancellor of the Duchy of Lancaster Oliver Letwin and centered on the Cabinet Office unclear. Whilst a very safe pair of hands in the form of Patrick McLoughlin takes over at the Cabinet Office, the precise fate of the putative unit that was being established under Olly Robbins remains to be decided. The dual logic, however, of gathering together "the best and the brightest" from the Civil Service to handle the monumental challenge of Brexit and the maintenance of some central coordinating body receiving input from across Government on its negotiating stance surely remains.
Another pair of Leavers can now be found in two other outwardly-facing Departments – one less obviously affected by Brexit, the other very much so. Priti Patel takes over at the Department for International Development, a ministry which she once called for to be scrapped, which may lead to some interesting internal dynamics, initially. Meanwhile, Conservative leadership finalist Andrea Leadsom takes up the equivalent post at the Department for Environment, Food & Rural Affairs. Given that agriculture and UK fishery policy are arguably the sectors most intermeshed with Europe, courtesy of the mammoth Common Agricultural and Fisheries Policies, the new Secretary of State will undoubtedly have one of the most challenging briefs in Government.
Where the most outwardly-facing Departments have a tendency to be headed by Leavers, those with a more domestic focus appear to be inhabited by former Remainers. Whilst there may literally have been only one man for the Secretary of State for Scotland role, the Northern Ireland brief has been taken over by James Brokenshire – a tried and trusted quantity in the eyes of Theresa May from their time together at the Home Office. Following Brexit, the importance of these two briefs has only risen. David Mundell's role will be to ensure the integrity of the Union is maintained, its importance underlined by the fact of Theresa May's first formal engagement was to undertake cordial "getting to know you" discussions with the First Minister of Scotland in Edinburgh. Brokenshire will face the significant challenge of overseeing how to deal with the sole land border that the UK shares with another EU Member State, albeit one with which it has the closest of ties.
A degree of continuity actual or implicit can be found at the Ministry of Defence, Home Office and HM Treasury, all of which will be run by former Remainers. Michael Fallon will carry on as the Secretary of State for Defence, whilst Amber Rudd will take over from Theresa May as Home Secretary – both are known quantities and will have oversight of much of the UK's security apparatus, given the importance the Prime Minister places on this, following her lengthy tenure at the Home Office, which will only have been accentuated by the tragic events in Nice. Meanwhile, the role of Philip Hammond as Chancellor will be to mitigate as far as possible the economic headwinds resulting from the vote on 23 June – a tough job as the FTSE has lost more in value since the referendum than the UK contributed to the EU budget for some years. The Prime Minister will hope his gravitas and calm diplomatic skills can shift the tide. He has thrown out his predecessor’s plan for a Brexit budget and is firmly focused on the last quarter of the year. Rather than wait, business may want to seek to engage with Treasury contacts over the coming weeks and months to try and influence what commitments the Government might enter into via its Autumn Statement as this historic year draws to a close.
Greg Clark is a key beneficiary of the Whitehall shake-up, overseeing an expanded version of the Department for Business, Innovation & Skills. Rolling in the energy brief, its remit also addresses a new concept, industrial strategy. Ironically, a remit more frequently associated with the chancelleries of mainland Europe this new scope was last defined within a ministry in the UK during the turbulent 1970s. This contrasts starkly with the more laissez-faire policy previously pursued by Sajid Javid, now Secretary of State for Communities & Local Government, with whom Clark has effectively swapped jobs. Whilst the health of The City clearly remains central to the economic prosperity of the UK, greater Government intervention in the manufacturing base domestically appears to be on the cards, given a need to rebalance the economy by reducing its dependence on the services sector, particularly finance. Economists argue that access to a single market may be granted for goods but that is is less easy to do so for services on which the UK relies and which contribute some 88% to UK GDP. This more interventionist approach may also serve to assist some of those striving outside the South East to build businesses and grow economic prosperity, as well as the struggling households the Prime Minister has committed to help.
Over the coming days, we shall gain a fuller picture of the complexion of individual Government Departments and the Prime Minister's expectations of their precise role as junior ministers are appointed and their specific responsibilities spelled out. She faces something of a Catch-22 however: in dispelling calls for a snap election she must be seen to commit to Brexit and focus attention on this mandated objective. Meanwhile she must balance the need for departments to undertake "business as usual" and not get sucked into the tedious, technical and very long-winded negotiations that are bound to arise from Brexit. Meeting the disparate needs of the nation and keeping the balance true will be a Herculean task.
Meanwhile businesses need to plan ahead to engage with this new Government – the sooner that a company is ready to shape the impact of Brexit on its business, the greater the opportunity there will be for it to genuinely engage and optimise its business landscape against its commercial objectives and for its employees and suppliers.