Brexit Day 5 - Labour leadership debacle, return of the adults

Return of the adults

With much complaining about the leadership vacuum at the heart of government, the grown-ups finally returned to public view on Monday. David Cameron and George Osborne both gave statements of admirable class, accepting the result of the referendum for what it is – a legitimate expression of public will. More evidence that the second referendum idea just is not on the table in Whitehall and that DC and GO have no intention of revisiting the matter. I think there must be some relief that Cameron and Osborne will keep their hands on the tiller in the weeks ahead and it appears to me that they are taking their responsibilities seriously. Lesser politicians would have resorted to recrimination and teddy throwing. Nevertheless the subtext from Cameron was there: Leave has won, it’s time for them come up with a plan. It’s worth noting that Johnson and Gove were absent from the chamber yesterday for the PM's statement and we have not really seen either of them today.

Where Johnson and Gove have been absent Nigel Farage has been in full effect. He has acted magnanimously in victory, goading MEPs.

Labour Leadership: ‘from my cold, dead hands’

The collapse of the Labour party has been breath-taking. Jeremy Corbyn has seen a total meltdown in his support in the PLP following mass resignations since Sunday. The Times is reporting he has lost a motion of no confidence 172 against/40 with 19 abstentions. Tom Watson and Angela Eagle are due to meet him shortly – presumably the challengers. The motion is not binding and he has already said that he doesn’t recognise the vote and will hold on. If he is re-elected by the party membership the party could end up with two leaders - the MPs may refuse to recognise him as leader and elect their own. It would then be up to the Speaker, I understand from a well-informed person, to decide which of them to recognise based on which commanded the most support. BTW George Eaton of the New Statesman tweeted that he strongly suspected that Corbyn had voted for Leave.

Tory leadership: the death of George Osborne is much exaggerated

It’s all going to be over by 9th September according to Laura K (a week later than advertised yesterday). We will know all the runners and riders by Thursday and the field could be quite large – with Jeremy Hunt considering his options and Stephen Crabb now declared. Liam Fox is in the running too and may have some support from the 2015 intake. Guido has a useful spreadsheet here: https://docs.google.com/spreadsheets/d/19mKbV0UnIbX_lbiinKiquP0ghiFpsMl0owUO6_TJyzI/htmlview?sle=true#gid=0

We’ve also learned today from media reports that Lynton Crosby is to run the Boris campaign and Liz truss is to back him. Much discussion about Stephen Crabb who is seen as a real star and widely liked in the party but is inexperienced. Probably no time for a novice.

George Osborne is not standing for leadership he says in the Times today. Does Osborne now emerge as a key power broker? He has a large caucus of MPs in ministerial office across government. Who will he put his weight behind? It won’t be easy for him to back Johnson given recent events. But as I said yesterday this is about power as well as personality. If he plays the Chancellor statesman over the next few months he could rebuild his reputation and emerge as a key player in the post-Brexit order. He's experienced and has built formidable international connections. He also has credibility with markets and experience in crisis management. It may be needed.

A question that has been asked a thousand times in the last 24 hours is: if it is May and Johnson who are the final two that go to the membership ballot, is it a foregone conclusion that Boris wins? Is it even a foregone conclusion that it's May and Johnson on the final ballot? Excellent questions, given the ability of Tory leadership contests to surprise and confound. There are hints that May’s support in the membership could actually be quite strong and that the fight could be quite competitive. I will be asking my party colleagues in the weeks ahead.

Machinery of government to be thrown behind Brexit

In a statement to the House of Commons, the Prime Minister said that the Cabinet has created a new EU unit in Whitehall to run the negotiation – drawing officials from the Cabinet Office, the FCO, BIS and HMT. The new Unit will report to the whole Cabinet on delivering outcome of Referendum and will ensure new PM has best advice. I would imagine this will attract the brightest and best in Whitehall – which for all the bashing it receives – contains some exceptionally talented and bright officials. We’ll need them. The Chancellor of theDuchy of Lancaster (Oliver Letwin) will listen to all representations from MPs, and all devolved institutions will be consulted. I would hazard a guess the Lord Maude will again pop up in some capacity.

Second referendum? Second election?

An update on who is saying what…today…

· Health Secretary Jeremy Hunt said that there should be second referendum on the terms of the deal of UK’s Brexit – either through a second election or a referendum

· Tim Farron says the Lib Dems will fight the next election on a pledge to stop Brexit

· Boris has said that he will not hold a snap election if elected Tory leader – though the point of snap election is that you don’t tell everyone months in advance. Respite from electoral contests may be a welcome thing.

Scotland

Nicola Sturgeon hasn’t committed completely to a second referendum on Scottish Independence but she has gone as close as she can. I was asked yesterday whether Scotland can afford it. The answer is probably not – with a budget deficit as wide as Scotland’s they would need to implement immediate austerity and would possibly be looking for and IMF bailout before too long. This would not be an attractive option to say the least. There are other serious challenges to address: currency and lender of last resort. However, the political momentum is surely behind her. She has said “I have already made it clear that I regard it as democratically unacceptable for Scotland to face the prospect of being taken out of the European Union against the wishes of the people of Scotland, as expressed overwhelmingly in last week’s referendum. I am now determined to explore every avenue to retain Scotland’s EU status.” If she can get agreement in principle from the EU that Scotland can stay in the Club, it’s probably game on for a second referendum. But in doing so she is taking a big risk,

The UK’s future relationship with the EU

David Cameron arrived at a Summit with European leaders in Brussels. Awkward. Merkel said that the UK would not be able to cherry-pick elements of its EU membership. Which presumably is precisely what the UK negotiators will want to do. Great coverage from the FT here.

For those of us hoping that Boris Johnson was beginning to sketch out a model in the Telegraph on Sunday were disheartened to see the tweet below from Sam Coates. Given he had campaigned on taking the UK out of the EU, you might have thought a newspaper column on the subject would have been relatively straightforward undertaking.

Chris Grayling has suggested that the UK should reject freedom of movement and move to ‘freedom of labour’ concept. Watch this one – it’s got legs. Last night Nigel Farage he told Channel 4 news that there was a risk that Leave was backsliding on immigration. This is an important development as it shows the divisions are already emerging in Farage’s vision for our future, and that of those who will actually be making the decisions.

Writing the Daily Telegraph Jeremy Hunt said the UK should negotiate a "Norway plus" option for the UK with Brussels, which would see "full access to the single market with a sensible compromise on free movement rules".

Markets

A better day today for Sterling and FTSE today thankfully. The UK’s credit rating was lowered by Standard & Poor’s from top-rated AAA, Fitch from AA+ to AA, and Moody’s to ‘negative’. Ironically gilt yields fell below 1 per cent for the first time in history as investors rushed for safety.

Football corner

Donald Tusk trolled England last night. It just never ends:

Quote of the Day

Of Brexit Xavier Bettel, the Luxembourg prime minister said: “Married or divorced, but not something in between…We are not on Facebook, with ‘It’s complicated’ as a status.” (Source: FT)