Why we need to reflect on the British constitution over Christmas 

As the Christmas break approaches and Brexit chaos increases, investors and business people – in fact perhaps most of the country – might need to spend some time studying British constitutional theory and parliamentary procedure. Unfortunately, the leading work on the subject and the nearest thing to a manual for parliamentarians, Erskine May, is not yet available online and is otherwise considerably expensive Christmas reading. Yet should the government lose a no confidence vote, we will be in uncharted territory. Meanwhile, the full economic impact of the uncertainty has yet to be seen.

The Prime Minister prevented parliament from voting on her Withdrawal Agreement on 11 December to buy more time to persuade Members of Parliament that her deal was the best Brexit option available. A government running away from a key vote is not a sign of authority and it was clear there was no majority in the House of Commons for the government’s deal. Subsequent and rather predictable events in Brussels, as Theresa May attempted and failed to achieve some sort of tweaking to the agreement, showed she had little support amongst fellow European Union leaders either. In between those two events, as Conservative Party leader Theresa May faced and defeated a no confidence motion amongst her own MPs.

A government which cannot command the confidence of the House of Commons cannot continue. A government unable to exert its will on the House of Commons and a Prime Minister with diminished authority are the ingredients for the Opposition Labour Party to put down a motion of no confidence in parliament. If successful, it has a chance to replace the government. It has not done so, mainly for tactical reasons and because it has not decided to push all out for another referendum. However, there is every prospect of a showdown in parliament on the Withdrawal Agreement soon and, given the government currently does not have the numbers, the prospect of a no confidence vote (assuming the Labour Party agrees on its strategy). The problem is, we have never been here before.

The UK parliament has dealt with no confidence motions throughout its history but no government has lost such a vote since David Cameron’s government brought in the Fixed Term Parliament Act in 2011. In the past, if a government lost a no confidence vote the Prime Minister had a choice; either resign and give someone else, usually the Opposition leader, the opportunity to try to form a government, or go for a dissolution of parliament and general election. Now, if a government loses a no confidence vote there is a fourteen-day period during which any party, including the governing party, can try to win a vote of confidence and form a government. Should this not be possible, there will be a general election. However, the Act does not outline what should happen in those fourteen days and there is no precedent.

Here is much scope for confusion and uncertainty. A government in office but with a time limit would be scrabbling around to get support while the Opposition might be doing the same. As things stand, it is likely MPs would either vote for a general election or time would run out and require one. It is possible that a new government could form around support for a Brexit deal that commanded the votes of a majority of MPs. No such deal exists at present however so investors should not be surprised to see markets react and over-react as events unfold. One outcome that could gather support would be another referendum as a way out of the logjam. There could even be a coalition government formed for just that purpose; that seems a fantasy prospect but we are in strange times.