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Fall Out: A Year of Political Mayhem
In Number 10, Hill and Timothy took the same approach. On the steps of Downing Street May gave a very well received speech vowing to ‘fight against the burning injustices’ of poverty, race, class and health and make Britain ‘a country that works for everyone’. When it came time to set out May’s plans for Brexit, they knew it was the moment to write a big speech.
1
‘Brexit Means Brexit’
It all began with a phrase and an idea. The phrase, in a perfect encapsulation of so much that was to follow, was part Nick Timothy, part Theresa May. The two of them and Fiona Hill were in May’s parliamentary office. It was July 2016 and David Cameron had resigned. The Conservative leadership contest was under way and they were discussing how May, a leading though not prominent Remainer, could reassure the party base that she would respect the results of the EU referendum. As they tossed around phrases, Timothy said, ‘Brexit means Brexit,’ at which point May chimed in, mimicking the jingle-like cadence Timothy had used and adding the coda, ‘… and we’ll make a success of it’.
It was a phrase, as Timothy was to put it, ‘with many lives’. The immediate purpose ‘was to be very clear that she, as someone who had voted remain, respected the result and Brexit was going to happen’. In the months to come the phrase evolved. ‘It also became a message to people who didn’t like the result that they had to respect it. Brexit had to mean actually leaving and limiting the relationship, not having us effectively rejoin.’
‘Brexit means Brexit’ was a statement of intent, but there was still the question of what that meant in practice. Britain had voted to leave the European Union, but the destination had not been on the ballot paper. The Leave campaign deliberately never specified which model of future relationship should be pursued. Public debate dissolved into whether the UK would mimic Norway, Switzerland, Turkey or Canada.
Norway was a member of the European Economic Area (EEA) along with all twenty-eight EU countries, plus Liechtenstein and Iceland, giving it full membership of the single market, an area of 500 million people within which the free movement of goods, capital, services and labour – the ‘four freedoms’ – was guaranteed. While outside the European Union, Norway paid money into the EU budget and had to agree to all the standards and regulations of the market, except those on agriculture, fisheries, and justice and home affairs. The downside was that Norway was a ‘rule taker, not a rule maker’ and had no say over the future rules of the market.
Switzerland was a member of the European Free Trade Association (EFTA) but not of the single market, and its access to the market was governed by a series of more than one hundred bilateral agreements with the EU governing key sectors of the economy, though crucially not its banking or services sector. The Swiss made a smaller financial contribution to the budget than Norway and had to implement EU regulations to enable trade. A referendum in 2014 to end the free movement of people had led to retaliation from the EU.
Turkey, like Andorra and San Marino, was in a customs union with the EU, while outside the EEA and EFTA. That meant it faced no quotas, tariffs, taxes and duties on imports or exports on industrial goods sold into the EU and had to apply the EU’s external tariff on goods imported from the rest of the world. The deal did not extend to services or agricultural goods.
Canada had just concluded a comprehensive economic and trade agreement (CETA) with the EU after seven years of negotiations, which eliminated tariffs on most goods, excluding services and sensitive food items like eggs and chicken. The deal gave Canada preferential access to the single market without many of the obligations faced by Norway and Switzerland, for goods that were entirely ‘made in Canada’, but for Britain it would not have given the financial services sector ‘passporting’ rights to operate in the EU.
The alternative to all these models was to leave with no deal and revert to the rules of the World Trade Organisation (WTO), which imposed set tariffs on different products. Supporters of free trade said the average 3 per cent tariffs were not burdensome but on cars, a key industry for Britain, they were 10 per cent. Removing all tariffs would also be expected to see the market flooded with cheap food and steel, threatening the UK’s farming and manufacturing.
At this point the phrase ‘soft Brexit’ was taken to mean membership of the single market and the customs union, while ‘hard Brexit’ meant an alternative arrangement, though these terms were to evolve.
This approach was anathema to May, who rejected all attempts to compare the deal Britain might negotiate to any of the existing models. She told her aides, ‘That’s entirely the wrong way of looking at it.’ From the beginning May knew she wanted a new bespoke deal for Britain. The prime minister, with encouragement from Hill, saw the process as similar to negotiation she had carried out as home secretary in October 2012 when she opted out of 130 EU directives on justice and home affairs and then negotiated re-entry into thirty-five of them, including the European Arrest Warrant, several months later. ‘We have already done what was in effect an EU negotiation,’ a source close to May said. ‘We know how it works, we know what levers to pull and we know how to get what we want out of a negotiation.’
The first thing they wanted – the big idea – was a dedicated department to run Brexit. May, Hill and Timothy believed the ‘bandwidth’ in Whitehall was seriously lacking. ‘We knew we’d have a big challenge to get preparation for Brexit up and running quickly,’ a source close to May said. During a meeting in Nick Timothy’s front room the weekend before May became leader they decided they would create a standalone department, a move that put noses out of joint at the Foreign Office and the Treasury in particular. ‘We know Whitehall, we know how it works,’ the source said. ‘Unless you have a standalone department heading in the same direction then everyone works in silos.’ It was the first of many decisions with far-reaching consequences made on the hoof.
The idea of a new department for Brexit was enthusiastically supported by Sir Jeremy Heywood. The owlish cabinet secretary was a problem solver par excellence who had made himself indispensable to four prime ministers in succession, but his enemies saw a mandarin whose first priority in all situations was to maintain his own power base. As the official who had carried out the review that led to Hill’s departure from the Home Office, Heywood was understandably on edge after Team May’s arrival in Number 10. Under Cameron, the cabinet secretary had been driven to Downing Street every morning and then walked through Number 10 to the Cabinet Office. It was a symbol of his status. ‘When she came in that changed, he went through the Cabinet Office door,’ a senior civil servant said. ‘That was symbolic, putting him in his place.’
Heywood and May were well acquainted. They had dined together when she was home secretary. ‘He used to say that he didn’t look forward to these dinners because they had run out of things to talk about by the main course,’ a fellow mandarin recalled. However, the dinners served a purpose on both sides. ‘She did it because she was paranoid about what the centre was saying about her and it was a way of finding out,’ the mandarin said. Heywood, meanwhile, was spying for Cameron, who wanted to know what May wasn’t telling him. ‘In the Home Office she pulled up the drawbridge,’ said the mandarin. ‘It was like Gordon Brown times two.’
Keeping his job meant Heywood supporting the creation of new departments, even though that put him at odds with other senior civil servants like Sir Ivan Rogers, Britain’s permanent representative in Brussels – effectively the UK’s ambassador to the EU. Rogers – an intense character with a high forehead who spoke at one hundred miles an hour – felt that setting up new departments would consume the time and energy of officials that could have been better directed at the details of a potential deal.
The other issue facing Heywood was that almost no preparations had been done for Brexit, since Cameron had banned the civil service from working on contingency plans in the run-up to the referendum. The cabinet secretary had hoped to spend the summer getting the civil service ready but the earlier-than-expected end to the Tory leadership contest put paid to that. ‘We were caught flat footed,’ a senior civil servant admitted. One of May’s team said, ‘I remember thinking when I got to Number 10 that the absence of any real thinking about this massive issue the country was facing was really quite remarkable.’ Some said Heywood should have ignored Cameron. ‘It’s rather shocking that they did no preparations for Brexit,’ a Tory peer said. ‘They had a moral duty to prepare. People should have called for Jeremy’s head.’
The Department for Exiting the European Union (DExEU, pronounced Dex-ee-oo) was born out of the European and Global Issues Secretariat, a group of forty officials in the Cabinet Office, and quickly cannibalised the European affairs staff of the Foreign Office as well on its way to engaging more than four hundred staff. From early in her leadership campaign, May knew who she wanted to run DExEU – David Davis. ‘DD’, as he is known in Westminster, had been a whip during the passage of the Maastricht Treaty and then John Major’s Europe minister, jobs he had done with the devil-may-care bravado of an ex-SAS territorial, which remained the most interesting line on his CV and gave him an air of menacing charm that he had put to good use over the years. Davis finished second to Cameron in the 2005 leadership contest before throwing away his frontbench career as shadow home secretary with a maverick decision to resign his seat and fight a by-election to highlight civil liberties issues. That finished him with the Cameroons and paved the way for May to become home secretary. Davis became May’s most obstreperous backbench opponent during her time at the Home Office. A vociferous critic of the snooper state, he even joined forces with Labour’s Tom Watson to take ministers to court over the government’s surveillance powers. However, these confrontations had bred mutual respect not contempt – and crucially had even impressed Hill, whose stance towards May’s political enemies more usually resembled that of a lioness protecting her cubs. She told a friend, ‘He’s an absolute pro and having been on the receiving end of his campaigning for things like counter-terrorism laws I know how good he is. When he came onto the leadership team we really hit it off.’
Having been given a chance to do a serious job in government, Davis resolved to make himself useful to May and not allow policy differences to open between DExEU and Downing Street. ‘He decided he wanted to be a political consigliere to her,’ a source said. Davis’s attempts to ingratiate himself with May went to extreme lengths. ‘She and DD had this hideous flirting thing going on,’ said one official who attended their meetings. ‘She twinkled at DD. It was awful, it was like your grandparents flirting. Everybody wanted the ground to open up and swallow them whole.’
At Hill’s instigation, and with Katie Perrior’s encouragement, James Chapman – a former political editor of the Daily Mail who had been George Osborne’s special adviser – joined as Davis’s special adviser and chief of staff. The appointment raised eyebrows since it was a leap to go from the man most determined to stop Brexit to work for the minister now charged with delivering it, but Chapman was highly intelligent, calm under pressure and brought a deep knowledge of the Eurosceptic press, who would have to be kept on side through the negotiations. It was to be a mistake for both him and Davis.
To start with, DExEU was ‘a total and utter shambles’. Four ministers were crammed into 9 Downing Street, where there had previously been just one. ‘The department didn’t function properly,’ said one official. ‘One of the floors was a courtroom which we couldn’t change because it was a listed building. The press office people were sitting in the dock in the Supreme Court of the Colonies.’ The brass plaque on the front door still read ‘Chief Whip’s Office’.
DExEU was able to coax highly regarded officials to join from across Whitehall since Brexit was a career opportunity, but the civil service had to implement an outcome in which many did not believe. In Brussels, Ivan Rogers gave his staff a pep talk: ‘You’re going to be integral to the biggest negotiation the country’s ever done and your expertise is valued. But if you can’t work for a government that’s delivering a Brexit – and that may be a hard Brexit – don’t do it. Walk out.’ Very few did. But DExEU officials were hamstrung by not knowing May’s planned destination. ‘It could be anything from staying in the EEA to hard Brexit,’ an official said. ‘They didn’t really know where to start.’
The architecture created by Heywood and the chiefs created two problems, which would hamper the government’s planning for the next year. As the lead department, DExEU was both a key participant and expected to be an honest broker with other departments. A cabinet minister said, ‘DD was both a player and the referee.’ The resentments led to briefings against Davis and his new department. ‘There was a turf war,’ said a senior DExEU official. ‘The Foreign Office was massively put out and wanted to demonstrate that DExEU didn’t know what they were doing. We had to fight against that backdrop. It was Jeremy Heywood’s fault. There should never have been a separate department.’
The second problem concerned the official who was to play the most important role in the Brexit negotiations. Oliver Robbins was appointed not only permanent secretary at DExEU, the most senior mandarin in charge of the department, but also the prime minister’s personal EU envoy – her ‘sherpa’, in Brussels parlance. Tall, mild-mannered and bespectacled, Robbins was a labrador of a man but with the brains of a fox. Just forty-one when he got the jobs, he had little EU experience. What he did have was the patronage of Jeremy Heywood – who was grooming him as a successor – the trust of Theresa May, from a spell as second permanent secretary in the Home Office, and the power of incumbency as David Cameron’s last Europe adviser. He had also served as the prime minister’s principal private secretary during the handover from Tony Blair to Gordon Brown and as the director of intelligence and security in the Cabinet Office. He combined his Rolls-Royce CV with bags of intelligence and sharp elbows clothed in a slightly old-fashioned pompous bonhomie.
Ivan Rogers told Robbins he was taking on too much. ‘You’ve got two impossible jobs,’ he said. ‘Try sticking to one impossible job. The only job that really matters is sherpa because you have to be her eyes and ears around the circuit. You need to be the person to whom people transmit messages if they want to get them to the prime minister. If you’re not that, you’re toast.’
Robbins disagreed. ‘It would be harder to do one job and not the other,’ he said. A year later it was decided this was a mistake.
Robbins had May’s trust. On foreign trips, other officials watched jealously as he talked to the prime minister alone, without Hill or Timothy listening in. ‘He was allowed to have conversations with her one on one,’ a colleague said. A senior mandarin who worked closely with Robbins described him as ‘an upwards manager’, good at ingratiating himself with his bosses, less so with his peers.
Robbins’ split role created tensions with David Davis. ‘DD and Olly didn’t see each other regularly enough and Olly was travelling an enormous amount,’ a colleague said. Robbins’ office in 70 Whitehall was a ten-minute walk from Davis’s in 9 Downing Street. ‘The consequence was they hardly ever saw each other. You want your minister and your permanent secretary – who is also the PM’s sherpa – to be talking to each other all the time and they didn’t.’ That meant May’s two key advisers on Brexit ‘weren’t properly aligning where they were headed’. The official said, ‘DD was therefore saying things in public that were contrary to what Olly thought was a sensible position.’
It was clear to Davis that Robbins put more time and effort into the Downing Street half of his job. ‘His primary concern was the relationship with Nick [Timothy] because he knew nothing was decided by anyone else,’ a DExEU source said. Robbins was not alone in this attitude. Those who had served in the Cabinet Office’s EU secretariat could not see the point of DExEU. ‘There was resentment among the officials that they had ministers at all,’ said a source close to Davis. ‘They just thought they should report to Number 10.’ Davis war-gamed various scenarios for the Brexit negotiations but could never get Robbins to discuss ‘the plan’ – the strategy for the negotiation, which cards Britain held and when they should be played. More than one official concluded, ‘It was all in Olly’s head. It wasn’t really a properly functioning relationship.’
DExEU was not the only new department established that summer. May also ordered the creation of a Department for International Trade (DIT) to drum up deals with countries outside the EU. She handed the keys to Liam Fox, a former defence secretary and Brexiteer whose cabinet career had ended in controversy under Cameron but who was an enthusiast for free trade and travel and had cleverly cultivated May for years. ‘Liam would take her out for lunch, which no one else could bear to do,’ a special adviser recalled. DIT was slower to get off the ground but cannibalised UK trade policy and UK Export Finance, took the Defence Export Services Organisation from the Ministry of Defence and grabbed UK Trade and Investment, the part of the Foreign Office which was supposed to promote business out of Britain’s embassies overseas. It would take until January, six months after the department was set up, to get a permanent secretary: Antonia Romeo, another Heywood protégée. It was not until June 2017 that Britain acquired a lead trade negotiator. Crawford Falconer, an experienced New Zealander, took the job after the first choice, Canadian Jonathan Fried, walked away at the final stage because Heywood refused to raise the £260,000 salary.
When tackling Brexit, May had learned three crucial lessons from David Cameron’s renegotiation with Brussels before the referendum. The first was to ask for what Britain wanted, rather than making an opening offer calibrated to what the rest of the EU might accept. The second was to at least look like you were prepared to walk away from the talks to maximise leverage. The third was not to broadcast her negotiating position in advance to the media or MPs. A sound tactic this might have been, but by September 2016 May’s reticence in spelling out what Brexit really meant had led to claims she was ‘dithering’. The only announcement had been a reassurance to farmers and universities, on 13 August, that until 2020 they would keep the same level of subsidy outside the EU as they enjoyed inside it.
MPs on both sides of the EU divide were twitchy. Ken Clarke, the former cabinet minister and arch-Europhile, accused May of running a ‘government with no policies’. As the party conference approached – it was to be held, appropriately, in Timothy’s home city of Birmingham – May knew she had to add flesh to ‘Brexit means Brexit’.
The prime minister’s challenge was to reassure Brexiteers that she would honour the result of the referendum, despite her decision to vote Remain and despite insisting to those who voted to stay that she would get the best deal possible. The first part of the equation was made easier by May’s less than enthusiastic support for Cameron. ‘She was a reluctant Remainer,’ said one adviser, ‘but she’s never been any fan of the EU. She was absolutely comfortable in her own skin about why we were leaving.’ Timothy was a longstanding Brexiteer and Fiona Hill, while also a Remain voter, was quickly reconciled to the result and an enthusiast for the opportunities Brexit offered. May saw her first priority as confirming the triumph of the 52 per cent, both to prevent civil disorder and protect her own position within the Conservative Party. She told her closest aides, ‘We need to keep this country stable because this could get quite messy.’ The senior Eurosceptics, including veterans like Bill Cash, Bernard Jenkin and John Redwood, plus Steve Baker – the leader of the backbench Eurosceptic forces during the referendum campaign – were agitating. ‘It was a hugely tense moment leading up to conference,’ one sceptic said. ‘Was she going to do Brexit properly or not? All hell could have broken loose.’ A Downing Street aide said, ‘We had to be absolutely clear with the party that Brexit really did mean Brexit – and with some parts of the country. Any confusion would have led to real disruption and calls for another referendum.’ May’s view was, ‘We live in a democracy, democracy has spoken. Now we have to enact it.’
Tory leaders usually give their big conference speech before lunch on the Wednesday. May was keen to lay out her vision for Britain, but if that was not to be drowned out by Brexit she would need to deliver it separately – and first. Timothy said, ‘It’s unsustainable to wait until Wednesday to hear from Theresa when it’s her first conference as leader.’ Hill agreed: ‘We need two speeches and a plan for Europe. Then we can have a big conference speech about our domestic agenda.’ May was ‘already there’ and agreed immediately. She would give a short speech on the Sunday on Brexit.
Used to governing by speech, May’s aides say she used the writing process to define policy, rather than have the speech reflect a pre-ordained line. Timothy discussed with May what she wanted and then wrote a text. The finer points were clarified in ‘an iterative process’ involving May, Timothy, Hill, Jojo Penn, the deputy chief of staff, and Chris Wilkins, the head of strategy who had penned May’s ‘nasty party’ speech fourteen years earlier. ‘The first draft is a hypothesis that either she agrees with or not,’ one of those involved said. ‘Nick being Nick would write the most “out there” option and it would get reined in. The process of drafting and editing gets Theresa to the point of, “Yes, that’s what I want to say.”’
Timothy and May were clear on three things: leaving the European Union meant leaving the jurisdiction of the European Court of Justice in Luxembourg, and leaving with it the single market and customs union over which its judges held sway. Anything else, Timothy believed, would leave May open to the charge that she was trying to undermine the referendum vote, and put the other EU countries in a position to claim that Britain wanted the benefits of EU membership – free access to markets – without the downsides – the cost and the need to accept rules made elsewhere. By opting out of all these areas, May could then try to negotiate some of the benefits without being tied to the institutions. ‘Nick’s view,’ a Downing Street aide said, ‘was that you’re always going to be accused of cherry picking and they’re going to say you can’t cherry pick. Therefore, we should try and forge our own way forward with a new relationship. Nick largely wrote the speech and took pleasure in doing so.’
In the speech, May was to say, ‘There is no such thing as a choice between “soft Brexit” and “hard Brexit”. This line of argument – in which “soft Brexit” amounts to some form of continued EU membership and “hard Brexit” is a conscious decision to reject trade with Europe – is simply a false dichotomy.’ May explained her new deal ‘is not going to be a “Norway model”. It’s not going to be a “Switzerland model”. It is going to be an agreement between an independent, sovereign United Kingdom and the European Union.’ Timothy said later, ‘If you seek a partial relationship the danger is that you will be in the worst of all worlds, where you will be a rule-taker with none of the advantages of being in, but you will also sacrifice some of the advantages of being out.’
There was a demonstrable logic to all this but it is extraordinary that these, the foundational decisions of Britain’s withdrawal strategy, which would shape the next two years of negotiations, were taken, in essence, by two people. The cabinet certainly had no chance to debate them.
