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The U.K. election: Another fine mess

Neil Hodge | June 13, 2017

If the future of the United Kingdom and its relationship with the European Union looked uncertain before the 8 June general election, it looks even worse after it.

Prime Minister Theresa May’s decision to call a snap election was meant to increase the government’s parliamentary majority by exploiting the internecine rivalry within the opposition Labour Party. Instead, she managed to lose seats, lose the Tory Party majority, and galvanise Jeremy Corbyn’s position as opposition leader—a rare feat that no pollster put money on.

At a cost of £130m to the taxpayer, the general election has widely been seen as a disaster for the government and an unnecessary distraction from a wealth of problems that the country is facing, not least Brexit.

May’s calamitous gamble was meant—in her own words—to strengthen her hand in Brexit negotiations with the European Union and the European Commission. Nothing could now be further from the truth, and the inescapable fact is that the election would never have achieved these aims anyway.

According to the Brexit timetable, the government needs to negotiate the United Kingdom’s withdrawal from the European Union by March 2018, which would have left the Tories with another two years in office before the public went to the polls again. Hence, the Tories’ term of office did not need to be extended to achieve Brexit.

More importantly, however, neither the Commission nor the leaders of the other 27 EU member states cared anyway whether May had an increased majority: It is completely irrelevant to them and the Brexit negotiations how popular the government might be at home, and holds no weight.

Without a majority, the election result has caused a “hung Parliament,” which means that the Conservatives need to form a coaltion to achieve a majority government. (It would still be possible for them to function as a minority government, but they would run the risk—however slight—of other parties joining together to defeat future legislation). Their choice of coalition partner, with 10 seats in Parliament (two more than the Tories need), is Northern Ireland’s pro-British Democratic Unionist Party (DUP).

The two parties are still in negotiations at the time of this writing, but the prospect of such an alliance has already highlighted several potential problems. While the DUP has a natural affinity to supporting the Conservatives, it disagrees with the Tories on a number of key issues, particularly surrounding Brexit.

For example, the U.K. government wanted a “hard Brexit” with no deal on the Single Market and the EU customs union, but as Northern Ireland has a direct land border with Ireland, a EU member, the DUP wants free trade with the Irish Republic and the EU, arrangements to facilitate ease of movement of people, goods and services, and the rights of British citizens in the EU and those from EU member states living in Northern Ireland to be safeguarded. It also wants a “frictionless” border—a point that is seen as vital given the improved relations between both countries since 1998’s Good Friday Agreement.

More widely, the Conservative’s decision to invite the DUP to form a coalition at Westminster means that the British government is effectively siding against Northern Ireland’s other main political party, the pro-Republican Sinn Fein. This is a touchy issue given the fractious nature of Northern Irish politics, particularly since the Northern Irish Assembly, the country’s executive body, has been devolved since January.

As concerns over Brexit gain dominance, the Conservatives’ weakened position may put their manifesto promises regarding business and regulation in jeopardy too—however certain they seemed just a month ago. One of the Tory party’s central aims—and a key plank of May’s leadership bid last year—is to change the rules so that foreign investors looking to buy U.K. companies will be subject to greater scrutiny about their intentions from the outset of the bid process, while also ensuring that all promises and undertakings made in the course of takeover bids can be legally enforced afterwards.

The Conservatives also want to pass legislation to make executive pay packages subject to strict annual votes by shareholders, as well as force listed companies to publish the ratio of executive pay to that of the broader workforce and explain their pay policies better. The party is also keen to close the gender pay gap, ensure that employees’ interests are represented at board level, and give workers a right to request information relating to the future direction of the company (subject to “sensible safeguards”).

Prior to the election, the Conservatives said they wanted to tackle particular industry sectors where governance abuses are deemed to be serious—most notably, curbing tax advisory firms from helping clients with tax avoidance schemes, and introducing a sanctions and compliance regime that would compel internet and social media companies to monitor and remove content that breaches U.K. law.

Other controversial proposals, such as incorporating the Serious Fraud Office (SFO) into the National Crime Agency to improve intelligence sharing and bolster the investigation of serious fraud, money laundering, and financial crime could also face opposition—or be dropped altogether, depending on the appetite of MPs to support them.

It is debatable how many of these election promises the Tories would have pursued in reality if they had held their majority, or how many would have reached fruition—the manifesto was written on paper, not in stone. But the point is that the Conservatives are more dependent on (and accountable to) the other parties that they would have liked for Brexit and everything else, and any changes that the government wants to introduce to hold business to account are much more likely to face lengthy opposition.