The Prime Minister has been absolutely clear: she will not give a “running commentary” on Brexit negotiations. It would be “crazy” to give details of Britain’s negotiating stance ahead of the talks that will commence after Article 50 of the Lisbon Treaty has been triggered. And, of course, there will be no vote on what emerges at the end of those talks.
If Theresa May were a corporate CEO and she carried on like this there’s a good chance that she would have been fired by now. I know, I know, the UK isn’t really a corporation, but lots of people, and lots of politicians, like to talk about a notional “UK plc” so let’s for a moment imagine that it is.
May, of course, is our chairman and chief executive officer (which in itself is a problem in the business world where you’re supposed to divide the two to avoid the over-concentration of power) and Chancellor Philip Hammond is the finance director.
Around the Cabinet table are sat the members of the executive committee, while the MPs in Parliament are the non-executive directors with the job of exercising oversight on behalf of us as shareholders. All clear? Good, so let’s get started. This is an upside down negotiation but…
That’s the really crazy thing about all this. No business would agree to a deal and ask its shareholders to vote on it without first negotiating the terms, as is happening with the UK’s EU exit. It’s absolutely the wrong way to go about things. But we are where we are. And there are at least some similarities with situations that sometimes occur the business world. Companies regularly discuss strategy with their shareholders and seek their views, for example, after their results. If they are struggling – and bookie William Hill is a case in point – those shareholders will sometimes tell them to go out and find a deal. Think of those meetings as being rather like our advisory referendum.
After taking such advice, no CEO would be given a blank cheque like the one May has assumed for herself
No one’s quite sure what Brexit will mean in practice because our CEO and our executives refuse to tell us. That wouldn’t be allowed to happen in the corporate world where shareholders, rightly, demand and receive regular updates, even in the midst of negotiations, which are then discussed and debated. No CEO would do what May and her team have done, which is to assume for themselves the role of deciding what Brexit means, how it will work and where they want to end up without reference to their non-executive directors in Parliament or to their shareholders in the rest of the country. The only reason MPs are getting any involvement at all in the process is because the courts have decided that doing things that way is more than just immoral. It is, you know, illegal under the British constitution.
Negotiations are never as secretive as May seems to be claiming
They’re just not. The Prime Minister is right in one respect. Corporate executives don’t conduct running commentaries. But they do issue regular updates. In a hostile negotiation – and let’s be clear this is a hostile negotiation – there are regular set piece shows where one side sets out its position. The other side then responds. Along the way, shareholders are able to give voice to their views as to which they favour, and what sort of terms they might be willing to accept. Non-executive directors are supposed to pay heed to these views and ensure that the executives pay heed to them too. Nothing like that is happening here, where May and her team seem set upon presenting their deal as a fait accompli which we shareholders will have to either like or lump.
Only a really bad CEO would cut the finance director out
Given the centrality of this function the finance director would usually expect to play a key role in any negotiation. And yet there are fairly strong indications that Britain’s chief financial officer and his team are being cut out of the process. That is the way madness lies. UK plc would be on all the corporate governance naughty steps if it were a business and behaved in this manner.
About that upside down negotiation: shareholders would expect to get a vote at the end and so should we
At the conclusion of a contested negotiation on a big deal like Brexit, shareholders always, but always, get a vote. Even if it’s an upside down negotiation (see above). If a company speaks to its shareholders and their advice is “go get a deal” there is always but always a vote at the end of the process when the cards are on the table. Shareholders are always given the opportunity to change their minds if they want to. It wasn’t so long ago that William Hill was talking about what a number of its shareholders thought was a bad deal with Amaya, a Canadian gambling outfit. Those shareholders clearly said: actually we’ve thought about it and we don’t much like this idea. So William Hill walked away. The British people told May to go and get a deal. But she is denying them the chance to change their minds even though that is the democratic thing to do, and there is clear precedent. There were two votes on EU entry in the 1970s. The shareholders in UK plc were offered the chance to think again. Given the importance of this decision, and the way the referendum campaigns were conducted, they should be given the chance. UK plc isn’t a company, but that’s kind of the point.
See above. It’s vitally important that the owners of a company, the shareholders, are fully consulted and engaged in matters of strategy and in the processes of deal making when it happens. It is that much more important in a democracy. If May and her team go out and get the good deal for Britain they claim they can, why are they so scared of putting it to the electorate? There has been much talk about democracy and the will of the people where the EU referendum is concerned. But since then, the Government has proceeded to flout the law and behave in a profoundly undemocratic manner. Such behaviour wouldn’t be tolerated in the corporate world. It shouldn’t be tolerated in UK plc either.