16 Dec

ABCC UK General Election Update – 16 December 2019 - Boris Johnson Returns Majority for the Conservative Party – Clears Way for Brexit on 31 January

Historic Conservative Win

  • The UK went to the polls on Thursday 12 December with Prime Minister Boris Johnson’s Conservative Party securing a majority in the House of Commons. 
  • With a total of 650 seats in the lower house, the Conservatives won 365 seats – well clear of the 326 needed to win.
  • Analysts note that the Conservatives made strong gains in traditional Labour heartlands including constituencies in Northern England, the Midlands and Wales where the electorates voted for Brexit in the 2016 EU Referendum.
  • In a symbolic move, Johnson gave a maiden speech in former Labour PM Tory Blair’s constituency of Sedgefield on Saturday.  Johnson reminded new Conservative MPs, many of whom were elected by traditional Labour voters, that they are ‘servants of the people’.  Speaking to voters, he added “I want the people of the north-east to know that we in the Conservative party, and I, will repay your trust.”

‘Catastrophic’ Labour Loss

  • In its worse electoral performance since 1935, the Labour Party lost 59 seats, including all but one of its seats in Scotland.
  • Speaking after his constituency declared, Labour leader Jeremy Corbyn said he would stand down as leader early next year.  Corbyn said he will continue to serve as an MP. 
  • The party’s National Executive Committee (NEC) is likely to set out a timetable for electing Corbyn’s replacement in January.
  • Writing in two Sunday newspapers, Corbyn apologised for the loss saying, “I’m sorry that we came up short and I take my responsibility for it.”
  • Shadow Chancellor John McDonnell will also quit the front bench and also apologised for Labour’s ‘catastrophic’ defeat.
  • The race to succeed Corbyn has by all accounts already begun with potential contenders being listed including MPs Sir Keir Starmer, Rebecca Long-Bailey, Angela Rayner, Jess Phillips, Lisa Nandy and Emily Thornberry.

Scottish National Party Victory; Loss of Liberal Democrat and DUP Leaders

  • The other major winner in the election, the Scottish National Party (SNP), secured 48 (+13) of the 59 Scottish seats.  In a blow to the Liberal Democrats, the SNP unseated leader Jo Swinson in Dunbartonshire East.
  • Following her party’s win, Scottish First Minister and SNP leader Nicola Sturgeon said Scotland had a renewed mandate for a second independence referendum.  In a call with PM Johnson, Sturgeon said that it was ‘unsustainable’ for the UK Government to continue blocking a second vote.  Johnson maintained his commitment to the Union and opposition to a second referendum.
  • A Liberal Democrat leadership election will be held next year with Sir Ed Davey, the party’s Deputy Leader and Baroness Sal Brinton, its president acting as interim leaders until a replacement for Swinson is found. 
  • Commentators note that the pro-EU party’s electoral pledge to cancel Brexit without a second referendum was not popular amongst voters.
  • The Democratic Unionist Party (DUP) lost two of its seats, including that of its leader in Westminster, Nigel Dodds.  In the last Parliament, the Conservative Party was reliant on the support of the DUP to pass legislation.

Queen’s Speech on Thursday

  • MPs will return to Westminster tomorrow, Tuesday 17 December before the Queen opens parliament on Thursday 19 December.  During a Queen’s Speech, the Government sets out its new legislative agenda.
  • Boris Johnson’s EU Withdrawal Agreement Bill (WAB) will be a central feature of the Queen’s Speech.  With his majority now in place, Johnson is expected to move quickly to ensure that Brexit is delivered by the 31 January deadline.  Johnson could table the WAB as early as this Friday 18 December.
  • Once the UK leaves the EU, negotiations will begin for a future UK/EU free trade agreement.  During this 11-month transition period, the UK will stay aligned to EU regulatory structures, including the EU’s Customs Union, until a deal is struck.  The withdrawal agreement stipulates that the transition period can be extended by ‘one or two years’ but any extension must be agreed before 1 July 2020.
  • It is expected that the Queen’s Speech on Thursday will also include a commitment that spending on the National Health Service (NHS) will reach £33.9bn each year by 2023/4 and the establishment of an ‘Australian-style’ points-based post-Brexit immigration system.
  • In a nod to the Labour heartlands that propelled Johnson back into Downing Street, an extra £78bn is reportedly being earmarked for transportation projects in the north of England.
  • Downing Street has already confirmed that there will be a Whitehall-wide review of departmental structures.  Whilst none of the following is confirmed, initial reports include:
    • The proposed abolition of the Department for Exiting the European Union (DExEU) with key figures moving to the Cabinet Office and Department for International Trade (DIT);
    • The potential merger of DIT and the Department for Business, Energy and Industrial Strategy
    • The Department for International Development could be merged into the Foreign and Commonwealth Office (FCO).
  • The Sunday Telegraph reported that Dominic Cummings, PM Johnson’s chief aide, will ‘spearhead plans for radical reforms to the civil service, including the processes for hiring and firing officials.’
  • With reports that up to a third of cabinet members are facing ‘the sack’, a new Boris Johnson Cabinet will be announced in early February, once the UK leaves the EU on 31 January.  A budget is then expected to take place later in February/early March.
  • A minor cabinet shuffle will take place today to account for the loss of Culture Secretary, Nicky Morgan and Welsh Secretary, Alun Cairns – both no longer serving as MPs.

The Election and Australia

  • In a tweet on Friday, PM Scott Morrison congratulated PM Boris Johnson on a ‘resounding victory’ and in reference to his recent election campaign, said to say ‘G’day to the quiet Britons for us.’
  • Trade Minister Simon Birmingham said, “the second Britain is ready, Australia stands ready to shift into formal negotiations” [for a bilateral trade and investment deal].
  • Once the UK formally leaves the EU on 31 January, Australia and the UK can begin formal negotiations for a Free Trade Agreement (FTA). 
  • The UK has set out its priority to secure post-Brexit trade deals with Australia, the United States, New Zealand and Japan.  Under the terms of the UK’s withdrawal from the EU, the UK will legally be allowed to negotiate, conclude and ratify such deals, but only able to implement them once a UK/EU FTA is secured.
  • Negotiations for an Australian/EU FTA will also continue.

Key Figures from the Election

*Sinn Fein does not take its seats in the House of Commons.

We thank those of you who joined us on Friday for our Election Day Event in Melbourne.  Thanks also to ABCC Corporate Member Telstra’s Tully Smith and UK Consul General to Victoria, South Australia and Tasmania Chris Holtby OBE.  For photos of the day, please visit our Photo Library.

The ABCC on Brexit and a future Australia/UK FTA

The ABCC will continue to follow these developments closely. We look forward to keeping members up to date with the very latest from London and what it possibly means for the Australian-British business community. 

Earlier ABCC Brexit updates can be found on the ABCC Blog.

If you would like to receive more frequent updates or have any questions, please feel free to contact our office on abcc@britishchamber.com.

By Paul O’Hagan, General Manager (VIC, SA, WA), Australian British Chamber of Commerce

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