Writing for BrexitCentral yesterday, Lee Rotherham hammered home the point that the soon-to-be-appointed Prime Minister urgently needs to install Brexiteers inside Downing Street and Whitehall departments in order to deliver Brexit. He wrote:
“If Brexit means Brexit, then change as sanctioned by the referendum must, by definition, involve change. Ministers should now start accepting that they are in the business of transformation… Delivering Brexit needs freshness. It needs empowered departmental leadership. It needs ministers who have not become entangled in the small print of the Dead Deal they have been advocating, or intellectually compromised by it. It needs actual Brexiteers.”
There is little doubt that Theresa May’s administration has throughout its three years had the feel of a Remainer Government grudgingly seeking to deliver the Leave result as instructed by the voters at the 2016 referendum. And that’s hardly surprising, given how few of its members actually believed in Brexit from the beginning and campaigned for a Leave vote.
The numbers are actually quite stark. Of the 93 MPs who were appointed by Theresa May to her first Government in July 2016, I calculate there as having been 73 Remain backers (78%), 1 Undeclared voter at the time of the referendum (1%) and just 19 Leave voters (20%).
Three years later and the balance has barely improved. Naturally there have been many resignations (although departing Leave-backing ministers were actually often replaced with Brexiteers). But today, of the 94 MPs currently serving as a Minister or Whip in the Government, they break down as:
- 69 Remain backers (73%)
- 1 Undeclared voter at the time of the referendum (1%)
- 24 Leave voters (26%)
However, of the 219 Conservative MPs currently residing on the backbenches, they break down as:
- 102 Remainers (47%)
- 112 Leavers (51%)
- 4 Undeclared (2%)
- 1 Did Not Vote (Kirstene Hair, before you ask)
This imbalance between an overwhelmingly Remain-dominated Government while Brexiteers make up the majority of Tory backbenchers is unsustainable and must be addressed as a matter of urgency by the new Conservative Prime Minister.
I therefore felt it would be a worthwhile exercise to draw attention to a number of the talented Brexiteers currently languishing on the government backbenches – whether or not by their own choice – whose skills and expertise could be used in government under the new PM.
I’m not going to get into earmarking people for specific posts and there will be others not mentioned below who deserve recognition. Furthermore, I should emphasise that I am not proposing a 100% Brexiteer government and there are many honourable former Remain-backers who accept the referendum result and will play important roles in the next administration. But I hope the following might provide some inspiration for the new Prime Minister as he assembles an administration committed to delivering Brexit.
First of all there are the many Brexiteers who have quit the Government specifically over the May administration’s handling of Brexit. Aside from Boris Johnson – who BrexitCentral readers know I hope will be the one making the appointments – from the Cabinet we also lost David Davis, Dominic Raab, Esther McVey and Andrea Leadsom (as well as Priti Patel who quit for other reasons). From the Brexit Department itself, former ministers Steve Baker, Suella Braverman and Chris Heaton-Harris ought surely be due a recall to the ranks of the Government, while other Leave-backers to quit over Brexit itself were junior ministers George Eustice and Nigel Adams along with Whip Gareth Johnson.
Then there is a significant raft of parliamentary private secretaries (PPSs) who quit over government policy on Brexit. Ordinarily, these unpaid ministerial aides are the next likely candidates for promotion to the ranks of the government proper, but in each of the following ten cases their decision to resign has for the time being stalled their progress: Andrea Jenkyns, Conor Burns, Chris Green, Robert Courts, Scott Mann, Anne-Marie Trevelyan, Ranil Jayawardena, Michael Tomlinson, Craig Tracey and Eddie Hughes.
Some more junior Brexiteer Tory MPs have opted to beaver away on select committees these last few years rather than find themselves obliged to toe the government line by taking a PPS job. Jacob Rees-Mogg is probably the most prominent example, but others who the new PM might want to consider fast-tracking to ministerial office include Marcus Fysh, Simon Clarke, Maria Caulfield, Henry Smith and ex-MEP Andrew Lewer.
But it’s not only those Brexiteers whose talents are yet to be recognised who the new Prime Minister should be looking at using: what about the wiser owls who have ministerial experience but who Theresa May either ignored or fired? Former Cabinet Ministers Theresa Villiers, Iain Duncan Smith, David Jones, Owen Paterson, John Whittingdale and Sir John Redwood all fall into this category, as do former junior ministers like Sir Mike Penning, Mark Francois and James Duddridge.
And finally, there is a clutch of long-serving Brexiteer MPs who have never served as ministers and instead directed their energy at other roles, for whom the assembly now of a new government might finally present the opportunity to serve as a minister. The 1922 Committee Chairman Sir Graham Brady considered a run for the Tory leadership but opted against doing so and ought to be in line for a government job, while I wonder whether senior select committee veterans like Sir Bernard Jenkin, Julian Lewis and Richard Bacon could be considered for a job?
Putting together a government is evidently a tricky business, managing egos and expectations, and likely disappointing a number of colleagues. Numerous factors need to be taken into consideration, not least regional balance and gender/ethnic diversity, but when many of us look at the new government to be appointed later this month, the one thing that we will consider first and foremost is: does this government collectively believe in Brexit and the opportunities it affords? The identity of those who the new Prime Minister appoints to his government will give us our answer and I hope to see many of those I have highlighted above being suitably employed.
The post We need a government that believes in Brexit: some advice on ministerial appointments for the new PM appeared first on BrexitCentral.
As we reach the concluding stage of the Conservative leadership election, with Tory members up and down the country starting to fill in their ballot papers, it is only appropriate that we at BrexitCentral should now formally take a view as to who should be the next Prime Minister – the Prime Minister to deliver on the historic referendum result of more than three years ago and get the UK out of the European Union.
First of all, we’d like to thank all the candidates who have engaged with BrexitCentral during the campaign. From the ranks of those eliminated earlier in the process, we were pleased to publish pieces from Matt Hancock, Mark Harper, Sajid Javid, Andrea Leadsom and Dominic Raab setting out their respective visions for delivering Brexit.
As far as Brexit is concerned, we feel the centre of gravity on the Tory benches has shifted during the course of this leadership election, with those actively opposed to No Deal under any circumstances now evidently reduced to a rump. Indeed, it is significant that both finalists – Jeremy Hunt and Boris Johnson – are committed to leaving without a deal if the EU refuses to come to a reasonable arrangement with the British Government.
Jeremy Hunt set out his big picture vision for Brexit for us here, and elaborated on this with a ten-point delivery plan last week. There is much to recommend in many of his proposals and, since there is no monopoly on good ideas, if he is unsuccessful, we trust that the victor will take the best aspects of his plan on board.
Hunt also deserves praise for being one of the first senior Remainers in the Government to declare that he had changed his mind on Brexit, as he did in an interview with Iain Dale on LBC in October 2017. He explained how the arrogant behaviour of the European Commission since the referendum had made him rethink his position, while also admitting that he was wrong to have believed the Project Fear predictions of short-term economic pain that we were told would result from a Leave vote.
It is both notable and regrettable that when asked whether she had changed her mind since the referendum, Theresa May repeatedly refused to answer the question, such as when she was probed by Jeremy Paxman on the matter during the 2017 general election campaign.
Boris Johnson, however, has been an unstinting and passionate advocate for leaving the European Union since a time when it was still an unfashionable, anti-Establishment view. As Mayor of London, he defied the call from Prime Minister David Cameron to row in behind the Remain campaign and became an energetic advocate for Vote Leave. (Indeed, it’s a pity that he did not take the helm of the ship of state when Cameron left office after the referendum, but let’s not rake over old coals).
And then, exactly one year ago today, Johnson again put his career on the line for the Brexit cause when he, along with David Davis and Steve Baker, resigned from the Government in protest at Theresa May’s unacceptable Chequers proposal.
In his pitch to BrexitCentral readers yesterday, Johnson explained that he feels “a deep sense of personal responsibility for Brexit” and that this is why he is best placed to see it through – an assessment with which we agree.
More than three years on from the referendum, Brexit must happen, and soon, or else there is a risk that what little remains of public confidence in the democratic process will evaporate entirely, with the traditional party system also obliterated as a by-product. Boris Johnson understands the urgency of the situation and his specific commitment to deliver Brexit by the hard deadline of 31st October makes it clear to us that he is the right candidate to replace Theresa May.
Moreover, we believe he would inject a much-needed dose of optimism and positivity into the Brexit narrative emanating from both Downing Street and Whitehall. Under Theresa May, far too many ministers and civil servants have not only been reluctant to embrace the opportunities presented by our departure from the EU but, in some cases, they have actively tried to scupper the delivery of Brexit and been allowed to undermine the UK’s negotiating position without any repercussions from Number Ten.
We anticipate that Boris Johnson would oversee a very different operation. It will be important for him to ensure that those around him in Downing Street, as well those appointed as ministers, are signed up to his vision and timetable for delivering on Brexit. Wider than that, he will need to be diligent in his choices for other impending appointments such as the next Ambassador to the United States and Mark Carney’s replacement as Governor of the Bank of England if the government is to present a cohesive vision for Brexit Britain.
There are of course many issues aside from Brexit that require urgent attention from whoever becomes Prime Minister, such as housing, adult social care and funding for those with special educational needs, to name but three. Many of the public are getting understandably and increasingly agitated that big issues like these are not getting the attention they deserve owing to the amount of bandwidth taken up in Whitehall by Brexit. This is why we judge the delivery of our departure from the EU by that forthcoming deadline of 31st October as promised by Boris Johnson to be all the more important.
Through twice winning the mayoralty of a Labour-inclined city as a Conservative and attracting support for Vote Leave from those of all creeds and classes across the nation during the referendum campaign, Boris Johnson has a proven record of getting the public behind him against the pundits’ predictions.
If ever modern Britain needed a Prime Minister who could bring people together for a cause, it is surely now and for the delivery of Brexit. Right now Brexit is unfinished business – and we believe Boris Johnson is the right man to finish the job.
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At a crucial moment in the battle to leave the European Union, I am fighting to keep a dream alive.
It is a vision that could increase the UK’s economic competitiveness, boost international trade, create thousands of jobs, and rejuvenate many of Britain’s coastal communities and regions all at once, as set out in a brilliant paper by my colleague Rishi Sunak, it is The Free Ports Opportunity.
For the last two years, Teesside has been buzzing about the idea of hosting a Free Port at Teesport. This idea has huge support from the local business community and from local politicians like the Tees Valley Mayor Ben Houchen. The former Brexit Secretary David Davis visited our port last year to support the case.
But now this dream is in danger of dying – because of Labour’s demand that our exit from the EU must involve remaining in a Customs Union.
To understand why, you need to understand what a Free Port is.
A Free Port is an area that is physically within a country but legally outside it for customs purposes. Consequently, goods that enter a Free Port do not incur import duty. Instead, import duty is only paid if and when goods pass out of the Free Port and into the domestic economy.
This offers a number of advantages. Goods can be imported, processed, and then re-exported without incurring any duty. This incentivises international businesses to use the Free Port as part of their supply chain, thereby stimulating domestic manufacturing and creating jobs in the process. Free Ports also often offer their users a number of additional advantages, including tax reliefs and a simplified regulatory environment.
They are not a novel or untested idea. Indeed, there are now approximately 3,500 Free Ports operating in over 135 countries.
The UK is unusual in that we have no operational Free Ports. But there is a really compelling economic and social case that we need them.
Free Ports would make post-Brexit Britain a hugely attractive location for international businesses to process and trade their goods. Wherever Free Ports have been implemented properly around the world, they have demonstrated this effect.
Just look at how quickly and impressively the Jebel Ali Free Zone in the United Arab Emirates has transformed Dubai. In the space of just a few decades, this Free Zone has brought unimaginable wealth to the country. It now hosts 7,000 global companies, employs 145,000 people, and accounts for around 40% of the UAE’s total Foreign Direct Investment.
Jebel Ali may be a unique example, but Free Ports have also demonstrated their worth in highly developed and mature economies. The growth seen in Free Ports in the US, for example, has outperformed the US economy as a whole. Indeed, Rishi Sunak’s report predicts that if a Free Port programme in the UK were as successful as those in the US, we would create an additional 86,000 jobs.
Here in the UK, such a boost to our great port towns and cities is sorely needed. Half of the twenty most deprived UK districts are located on our coast. The European political project offered these communities very little – indeed, the Commons Fisheries Policy has been partly responsible for their demise. It was unsurprising, therefore, that almost 100 of the 120 English parliamentary constituencies that have a coastline voted to Leave in June 2016.
A report produced by the consultants Mace Group last year looked at what a programme of ‘supercharged freeports’ in the North of England might mean for the regional economy. It found that such a programme, once established, would:
- Boost UK trade by nearly £12 billion a year
- Create 150,000 extra jobs across the North
- Provide a boost to Northern powerhouse GDP of £9 billion a year (equivalent to £1,500 a year for every household in the North)
Although I’d eventually love to see Free Ports dotted around the entire UK coastline – like giant magnets pulling in container ships from every direction – I won’t miss an opportunity to fly the flag for Teesport in our bid to be the first new Free Port in the country.
Teesport is a hugely ambitious port, run by the extremely professional and impressive team at PD Ports. The container platform at Teesport has seen £120m invested over the past seven years, bringing improvements in infrastructure and state-of-the-art equipment to expand capacity. It would be the perfect site for a Free Port.
However, leaving the EU – and leaving it properly – is crucial for this opportunity to be realised.
This is where Labour’s demand for a customs union – and the Government’s apparent flirtation with it – is so dangerously misconceived.
A Customs Union would give the EU unilateral control over our trade and customs policy, and hand them power over the UK’s state aid rules. This would completely undermine any prospect of setting up meaningful Free Ports in the UK post-Brexit, as the necessary allowances would almost certainly be found to breach state aid requirements.
By pursuing their ideological drive for close alignment with the EU, therefore, the Labour Party is letting down many of their traditional voters in the UK’s most deprived regions, and denying them the opportunities that would otherwise be available if their decision to leave the EU were to be properly respected.
In areas like the North East, the Labour Party, with their narrative of gloom and negativity, has dampened the natural British spirit of enterprise and opportunity for too long. Denying our coastal communities the Free Ports opportunity because they are too afraid to let the British people govern themselves is just the latest expression of this defeatism.
We can and must do better – but we must reject the Customs Union if we are to do so.
Just yesterday the formal group of eurosceptic Conservative MPs – the European Research Group – were described as “far right” on television by the Head of Comms of the Centre for Policy Studies. Emma Barr, who until recently worked as a Press Officer for CCHQ , has since claimed she meant the right of the Conservative Party, but this is just the tip of the iceberg when you consider the attacks on a group who are representing the mainstream Leave vote.
Barr also said that the ERG hadn’t compromised “at all”, which is just untrue. The irritating whine over the last few years from the talking heads has been that the Prime Minister has been “captured” by the ERG who have forced her to be too hard line. The truth is, the ERG have bent over backwards for a Prime Minister who has happily banked everything they conceded until she finally, this week, ditched half her party in favour of the Leader of the Opposition.
Just ask yourself this: would we still be in the EU nearly three years after the referendum if the Prime Minister was in the thrall of Jacob Rees-Mogg? Or would we be planning for the European Parliament elections if Steve Baker had Theresa May’s ear? For all her fighting talk at the last election, her grand exit strategy appears to have been a box-ticking exercise cooked up by civil servants. To ‘leave’, Theresa May used the EU’s own exit mechanism of Article 50 – hardly the tub-thumping idea of just repealing the European Communities Act suggested by some eurosceptics. She hadn’t even prepared the country for No Deal before she triggered Article 50, as Vote Leave had suggested should happen in their literature.
Far from ideological zealotry, the ERG’s compromises were too fast and too frequent for many Brexiteers. They accepted another 18 months of a transition period and even ECJ jurisdiction over the transition. Former Brexit Secretary David Davis accepted Downing Street’s sequencing of talks to begin with the ‘divorce’ first and then ‘trade’ second, despite personally disagreeing with it. The ERG even swallowed an exit bill of £39 billion, despite not believing that it was legally enforceable or that we even owed the money. Coastal MPs like Ross Thomson were apoplectic at the fact that under the transition the UK would remain in the Common Fisheries Policy after 29th March, after Downing Street dropped more of their red lines.
So who has really been captured? The only conceivable way in which Theresa May’s policy is connected to her Brexit-supporting MPs is that she needs their votes to get it through. But even then there has been no compromise from her side. Three times she has forced the same deal on the Commons with all the diplomatic guile of a battering ram.
When she, for one brief moment, appeared to be offering a compromise, almost the entire swathe of eurosceptics came so far they almost accepted her entire deal. The ‘Brady Amendment’, the one thing the Commons has actually approved, accepted the Withdrawal Agreement if the backstop was replaced with ‘alternative arrangements’. But this was a false dawn. Despite whipping MPs in favour of it, no attempt has been made by No. 10 to follow through. In her latest begging letter to Donald Tusk, the Prime Minister assured our bemused jailers that changing any of the unsigned Withdrawal Agreement was out of the question.
The idea that we’re in this mess because the Prime Minister has listened to Leave MPs is clearly false. Surrounded by the likes of Olly Robbins, Downing Street neither understands nor cares about the damage they have done to democracy, the constitution or the trust they have with the electorate. And when the history of this period is written, the ERG – the real mainstream of Leavers – will be viewed as flexible beyond belief in the face of a Government that treated them with nothing but suspicion and disdain.
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On Monday, the Prime Minister said “no government could give a blank cheque to commit to an outcome without knowing what it is, so I cannot commit the Government to delivering the outcome of any votes held by the House, but I do commit to engaging constructively with the process.”
She went on to say that “no-one would want to support an option that contradicted the manifesto on which they stood for election to this House.”
There were a barrage of complaints, chiefly from Opposition MPs. But many others have said that it is not in Parliament’s right to overturn the decision of 17.4 million people voting in a referendum commissioned by Parliament itself. Are they right?
In my time as an MP, I have fought many battles to defend Parliament’s rights over the executive. I did this for one reason. Parliament’s legitimacy, its power and authority, is based on the fact that it represents the people of the United Kingdom. In this case, however, Parliament’s authority is trumped by the democratic decision of 17.4 million people. This is the first time in our history that this has happened, and it raises a serious constitutional question. When Parliament and people clash, to whom does the government owe its first duty?
Today, Parliament’s authority comes from its democratic mandate. MPs have a duty to do what they believe is best, but they also have a duty to represent the interests of their constituents. They are representatives, not delegates. However, in 2015 Parliament chose by a majority of 263 to outsource the decision on our membership of the EU to the people. They made their decision. It is incumbent on Parliament to deliver on that decision.
The 2016 referendum was the biggest democratic exercise in British history. Turnout was high, with 72% of the entire electorate – 33 million people – having their say. Well over a million more people voted to Leave than did to Remain. The turnout was higher than in any general election since 1992, and more people voted for Leave than any other issue – or party – in our long and distinguished democratic history. Had it been a general election, it would have been a landslide that dwarfed Tony Blair’s victories.
Political parties from across the spectrum recognised the power of this referendum in the 2017 General Election. Both the Conservative and Labour parties swore in their manifestos to leave the Single Market and the Customs Union. In total, over 85 per cent of people voted for parties committed to this course of action.
Despite this, those opposed to Brexit are still trying to argue, disingenuously, that the people did not know what they were voting for. They claim that the people did not understand the risks or the implications; that they did not have the full facts.
Well it is true that the Government of the day did not give them the full facts.
The gloomy predictions of the Government’s Project Fear simply have not come to pass. We were told that if the people voted to Leave, there would be an immediate economic shock of a 6 per cent drop in GDP. There were dark mutterings of over 800,000 jobs being lost.
What has really happened? The UK economy is now growing faster than Germany and the Eurozone average. We have more jobs than ever before. We attracted more foreign investment in 2018 than anywhere else in Europe. In the face of the bogus official projections, gainsaid by all of the facts and all of their own experience, who could blame a plumber from Peterborough or a bricklayer from Birmingham if they choose to trust their own judgement over the supposedly better-educated elite?
The Establishment likes to believe it knows better, but this is certainly not always true. It did not foresee the 2008 economic crash, they wanted us to join the ERM and many argued for us to join the euro. This is hardly a record of competence anybody should rely on.
It is often said “people did not vote to be poorer”. This is no more than a patronising dismissal of the electorate’s justified realism. The people understood that forecasts can be wrong and that Treasury forecasts almost always are.
The British people knew exactly what they were voting for – and they rightly expect Parliament to deliver it.
And the more that the people hear that they did not know what they voted for, the more their opinion crystallises. We need only look at yesterday’s ComRes poll, which shows the largest yet recorded support for a no-deal Brexit. Over 40% of people believe we should leave on WTO rules, a number that grows every week. The idea that Leave voters did not vote to leave the Customs Union or the Single Market has no grounding in fact. It is patronising, and dismissive of their views.
So the Prime Minister is right to listen to Parliament, but she is also right to rule out any options that do not meet the democratic decision of the British people. Yesterday’s ComRes poll showed that a clear majority of people believe that attempts by Remain-supporting MPs and other Establishment figures to block Brexit were undermining the UK’s negotiation position. More than half believe that if MPs go against the 2016 decision it will irreversibly damage democracy. So the Prime Minister’s first democratic duty is to the electorate directly, to deliver a proper Brexit as soon as practically possible.
In the final analysis, the Prime Minister is the servant, not of Party, nor of Parliament, but of the people, and that should be her guiding principle throughout the Brexit process. Otherwise the British people will lose faith in their democracy, and the United Kingdom will face its Trump moment.
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There are very few people who are willing to argue publicly that Brexit has been a smooth and easy process. Nor are many likely to say that it has gone the way that most Brexiteers anticipated. Over the course of the past three years there has been a series of poor decisions and strategic errors in the handling of Brexit. These events have left the UK with an appalling Withdrawal Agreement and a Government without authority or credibility.
Trying the same thing and expecting a different result is often quoted as the definition of insanity, and yet this is now the position of the Government. The Prime Minister intends to bring her Withdrawal Agreement back to the Commons for a third time; but it will not go through Parliament. It suffered the worst government defeat of all time, by 230 votes, and then the fourth worst, by 149 votes.
These were record government defeats and still, the Prime Minister insists upon a third Meaningful Vote even though “nothing has changed”.
This is a ridiculous position for the UK Government to be in, but it is hardly a surprise. The awful Withdrawal Agreement is the result of a Prime Minister making a litany of blunders in her handling of Brexit and refusing to accept that she, like most Remainers, has not understood Brexit. There is a reason that there are so few Brexiteers still in government.
The first sign of the current crisis was the disastrous 2017 general election. All anyone will truly remember from her campaign was her ability to trot out the same meaningless phrases of “Brexit means Brexit” and “strong and stable” despite the clear evidence that nobody believed in her or her position. Naturally, this played out with her blowing record poll leads and the first Conservative majority for almost 20 years.
It demonstrated to the EU her inability to articulate a clear, sensible Brexit policy that could unite the UK and Parliament.
This electoral and parliamentary weakness was then compounded by her decision to give in to the EU’s demands on the progress of negotiations against the advice of the Brexit Secretary at the time, David Davis.
This concession to the EU handed complete control of the agenda to the EU and set the tone for the future of the negotiations. This put the UK in the ludicrous position of being unable to negotiate future arrangements at the same time as its withdrawal, despite the inextricable nature of the future arrangements and the withdrawal.
Theresa May has had little to no control over her Cabinet and ministers, let alone her parliamentary party. Fundamentally, she is too weak to exert any measure of meaningful influence.
Theresa May recognised this weakness, which is why she sought to balance her Cabinet between Remainers and Brexiteers, to assuage both sides of her party and to prevent a split. However, this has been an awful mistake as it has allowed Remainers to hijack the Brexit narrative and push the Prime Minister away from delivering a true Brexit.
Moreover, this strategy has been ineffective as the Conservative Party is now more divided than ever between Brexiteers and Remainers. Theresa May should have backed the Brexiteers in her Cabinet and, by doing so, challenged Remainers to respect the referendum and manifesto or to rebel against the party line. I suspect that, when pushed, most Remainers would have fallen behind the sensible policies put forward by leading Brexiteers like Canada+ or MaxFac.
Moreover, it is mostly Brexiteers who have resigned, whilst high-profile Remainers have stayed within government. This is a telling indicator of both Theresa May’s weakness and the failure of her Brexit proposals.
There are two possible reasons that Remainers are not resigning: perhaps it is because they can snipe against Brexit with impunity or maybe because they know that the proposed Withdrawal Agreement could see us inextricably trussed to the EU – Remain by any other name.
Another issue with prominent Remainers in Cabinet has been the refusal to allow adequate preparation for No Deal. There have been several reports of the Chancellor withholding allocated funding for preparations for a move to WTO terms. The Chancellor is also ultimately responsible for the endless stream of economic propaganda about Brexit, a continuation of the discredited pre-referendum Project Fear – which has been proven so drastically wrong.
Of course, we must not forget that some of the problems in the Brexit process started before the referendum took place. It is a shameful indictment of David Cameron and his Government that they arrogantly refused to allow the Civil Service to start planning for potential Brexit options.
They disregarded the possibility that they could lose the referendum. After all, how could they? The Remain campaign heavily outspent the Leave campaign and had the benefit of official government messaging such as the Government’s leaflet, which cost taxpayers £9 million.
This Government is caught in a seemingly endless cycle of errors, mistakes and poor decisions with each new loop inexorably bringing the Government further away from the lofty heights that Theresa May once promised. But this crisis is one of her own making and the signs were there: we should have seen this coming.
Photocredit: ©UK Parliament/Jessica Taylor
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The EU’s negotiating tactics are those of a bully: bullies are weak, hence the need to bully. Their approach is to take negotiations right to the wire and force the other side to give in by the shear fear of the consequences of not reaching an agreement in time.
They practised this on Greece to great effect. Bailouts were only agreed a few minutes before the deadline set by the previous bailout; Greece had to accept the terms laid out by the EU; they had no choice, for they had thrown away their strongest weapon – the threat of abandoning the euro and leaving the EU. They were the perfect hostages and the EU revelled in that and pressed their advantage. Greece had everything to lose, far more than the EU if a bailout was not agreed in time; the EU had little to fear from a collapsed Greek economy.
But the UK, the fifth largest economy in the world, is not Greece, the fifty-second in the economic league table. The EU has as much – if not more – to lose from a disorderly Brexit.
That’s why Theresa May’s call on Parliament to hold its nerve should be heeded. The Brexit negotiations will go to the wire. Fears that such a scenario would risk a chaotic exit by accident are part and parcel of Project Fear.
When Theresa May comes to Parliament next week, she may well not have much to report, no new developments on changes to the Withdrawal Agreement – something for which she is continually criticised – but changes will be coming and everyone must hold their nerve.
Her call will fall on deaf ears for those whose mission is to stop Brexit; they recite fear of a no-deal Brexit to try and make the Prime Minister bring forward a meaningful vote on a final deal prematurely in the hope that it will be voted down, forcing Parliament to seek an extension of Article 50. But for those MPs who wish to honour the decision of the people to leave the EU, holding their nerves is what they must do – not least Jeremy Corbyn.
The departure from the Labour Party of eight hard-line Remainer MPs last week is a testament to the success of Corbyn’s policies and a vindication of his approach to Brexit; they have one thing in common, their pathological hatred of Brexit and although they espoused several reasons for deciding to jump ship, had Corbyn supported a second referendum, none of them would have left. They saw the writing on the wall: Labour will respect the referendum result as promised in its manifesto and Corbyn is determined to ensure that it does. If they hoped that their departure and the threat of others following would force Corbyn to change his policies, they will be disappointed; far from weakening Corbyn, their departure has strengthened him.
Similarly for Theresa May, the resignation of three Tory MPs from her party, hard-line Remainers each one of them, is evidence of the success of the Prime Minister in honouring the result of the referendum. Theresa May and Jeremy Corbyn, each in their own way, must hold their nerve in the face of opposition from their own ranks. Never have two people, political opponents tearing lumps off each other, week after week, had their paths so closely aligned as they are on Brexit. Their strength, their tenacity and determination to deliver Brexit on the specified date is derived from the British people who are calling on Parliament to get on with it; but the people, the rest of us, we, too must hold our nerve.
The EU is acting in a predictable way; they are refusing to countenance any changes to the Withdrawal Agreement that has been rejected by Parliament and they will continue to do so until the very last minute. The Prime Minister is right to dismiss their attestations and press on. The danger of accidentally overdoing the brinkmanship and stumbling over a cliff-edge is implausible.
As we get within touching distance of 29th March, a form of words will be arrived at, compromises will be made. It’s of course possible that such compromises are left to such a late stage as not to leave enough time for the necessary housekeeping activities such as the formal endorsement by relevant bodies or making necessary legislative arrangements. In such a case, the UK will leave the EU as planned on 29th March – that date is enshrined into the EU Withdrawal Act thanks to the foresight of David Davis when he was Brexit Secretary, and we’ll seamlessly slip into the two-year transition period.
Such a process will be at odds with EU rules, but it won’t be the first time that the EU turned a blind eye to breaches of its rules, like when France exceeded the deficit to GDP ratio specified in the stability and growth pact or Germany’s contravention of state aid rules.
Parliament will have its meaningful vote, although it may take place after the fact – after the fact that we have already left the EU.
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Theresa May is going back to Brussels today following her visit to Northern Ireland, to meet Jean-Claude Juncker and seek changes to the Withdrawal Agreement.
But we already know that the EU has said many times that they will not re-open the Withdrawal Agreement, as doing so would mean completely re-writing it after two years’ work on the task.
On 14th December at a Leave Means Leave event, Jacob Rees-Mogg said that of the 585 pages that make up the Withdrawal Agreement, 68 pages concerned the backstop. However, he said that these 68 pages were not pure legal text, they were in fact a 68-page list of legal directives that apply to it!
How exactly can all of this be unpicked to create a new Withdrawal Agreement in time for 29th March, bearing in mind that the European Parliament’s five-year term ends on 18th April? There simply would not be time.
The Telegraph reported yesterday that Theresa May plans to put her revised Withdrawal Agreement to another vote before Parliament at the end of February but this may well end in another crushing defeat, especially if there are no concrete changes to the backstop.
David Davis is now saying he wants to present the Free Trade deal to the EU that he authored last summer, but was rejected in favour of the Chequers blueprint. Will they accept this at the eleventh hour, as he believes?
We also heard yesterday that some Cabinet ministers are suggesting they would need until 24th May in order to get through important Brexit legislation – but it is unclear yet whether the EU would accept this and whether it would mean a formal extension of Article 50.
There is also talk of an amendment being tabled at the end of February to block a no-deal Brexit after the Caroline Spelman amendment passed by eight votes on 29th January. Again, what would this mean?
It would certainly mean extending Article 50 to prolong talks with the EU to create a new Withdrawal Agreement, so that we do not leave without a deal in place. Extending Article 50 would also require the agreement of all 27 Member States – and if just one disagreed, it could not be extended.
However, as I mentioned above, the European Parliament ends its five-year session on 18th April and does not come back until July, in the wake of the European elections taking place between 23rd and 26th May.
If we were to extend Article 50, would it mean that we would have to fight those European elections in May, as we would still be a member of the EU?
This would surely not now be possible because the EU has already re-allocated 27 of the 73 British seats to other Member States, with 46 of them remaining empty to be used in future for any new Member States.
It seems unlikely that the EU would want its timetable disrupted by our Brexit indecision. We have already heard quite clearly from Michel Barnier that they do not want to reopen the Withdrawal Agreement to make any changes. They feel they have given enough time to it and need to move on to other things, since there are 27 other countries with their own issues to deal with.
Nevertheless, the Remainers in Parliament will be racking their brains right now as to how to stop Britain leaving the EU without a deal on 29th March.
A second referendum would most likely take at least a year to put together, which would mean an extension to Article 50 of a year or longer.
Would Remain MPs try to force the Government to revoke Article 50 altogether? This seems highly unlikely because of the huge backlash it would cause in Britain, not to mention the extreme embarrassment of our country spending nearly three years trying to get Britain out of the EU, with the whole world watching, only to drop the whole idea.
So the conclusion is that the only thing that Remainers could try to foist upon us is an extension of Article 50, in order to avert a No Deal. Yet, from the above it appears this would not be possible due to the EU’s timetable and the upcoming European elections.
So many Brexiteers are keeping their fingers crossed that the clock keeps ticking and that nothing can stop us leaving on Friday 29th March on WTO rules.
Unfortunately, the case for this has not been properly presented to the country, certainly not by what I would call our “Remainstream media”. The golden opportunities need to be clearly set out, especially if the EU will cave in and accept Article 24 of GATT, allowing us to trade with them without tariffs for at least two years or longer, until we do finally agree a trade deal.
90% of world trade is done on WTO terms and a considerable percentage of our trade is currently conducted on those terms – and of course the EU sell us £90 billion more than we sell to them.
Leaving on WTO terms gives us everything we wanted when we voted to Leave: taking back control of our country, our laws, our borders, our fishing rights and our money, as well as the ability to agree free trade deals with the rest of the world. The jobs that will be created will far outweigh any short term disruption.
Roll on 29th March!
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I read the news with increasing incredulity. After Michel Barnier’s spokesman told us that in the event of no deal there would have to be a hard border (How? 275 manned border posts? Expecting people to accept the blocking off of all but a few crossing points?), Barnier himself was forced to admit: “We will have to find an operational way of carrying out checks and controls without putting back in place a border”.
Later, speaking at an event in Brussels, Barnier’s deputy, Sabine Weyand, said that other options for the Irish border had been extensively discussed, the EU side were agreed that a time-limit to the Irish backstop defeated the purpose of having one and that “there is a very high risk of a crash-out, not by design, but by accident…”
So Barnier and Weyland have acknowledged that the EU’s insistence on including in the Withdrawal Agreement a temporary backstop – that will only be lifted by entering into a permanent trade agreement on the same terms because soft border controls will never be acceptable – will have the consequence that the Agreement will be rejected, leading to soft border controls being applied immediately.
The only possible explanation for such blatant perversion of logic is that the EU (Germany, France, the European Commission) are not interested in pragmatism, fairness or negotiation to mutual advantage but only in the exercise of power (‘winning’) – whether it be over the UK or over its own member states such as Greece, Hungary and Italy – regardless of the adverse consequences to their populace.
Weyand has kindly explained her justification for insisting on the temporary backstop (and presumably similar terms of any trade deal that will supersede it):
“We looked at every border on this earth, and every border the EU has with a third country – there’s simply no way you can do away with checks and controls,” she said (referring presumably to a hard border since checks and controls of some kind are, of course, essential).
This, then, is the EU’s irrefutable justification for saying that soft border controls are impossible: anything that has not been done before is, by definition, impossible. It is precisely this stifling, rigid, rule-driven madness and resistance to innovation that we must escape in order to be able to prosper on the world stage.
Meanwhile, we have to listen to the ludicrous predictions of Armageddon that will arise from “no deal” (i.e. leaving without the Withdrawal Agreement and transition period) Most famously recently we’ve had the Border Force’s prediction of an 87% fall in throughput through Calais (which even the Border Force described as the ‘reasonable worst case’). It’s impossible for us to know how they have arrived at that bizarre conclusion because no-one has seen their report. The story emanates from Sky News which stated that they hadn’t seen any leaked Border Force report but only “a slide from an internal government presentation marked ‘Official-Sensitive’ and titled ‘Freight Traffic Contingency Assumptions’” which purported to be “a recent internal assessment much of which was omitted from public no-deal documentation”.
It is upon that prediction, of an 87% fall in throughput through Calais, that the chief executives of Sainsbury’s, Asda, M&S, Co-Op, Lidl, McDonald’s, KFC and others have based their dire warnings of severe food shortages and higher prices; and now we have Imperial College predicting an additional 12,000 deaths in Britain caused by increases in the cost of fruit and vegetables leading to people being unable to afford to eat enough of them. Quite why the costs of such foods should increase so substantially when we move outside the trade barrier wall erected to protect French farmers isn’t mentioned, let alone explained.
UK food exports to the EU will be damaged by the imposition of the Common External Tariff that the EU imposes on all third counties. Reuters reports that France is hiring an additional 700 customs staff to be ready to deal with imports from the UK in event of a no-deal Brexit because “merchandise coming from Britain could face up to four separate customs procedures under a post-Brexit regime against only one currently. That could translate into an extra two minutes per truck going through border controls, which could potentially lead to long queues gridlock in ports,” according to French minister Gerald Darmanin. However, it’s puzzling to me as to why extra procedures will be required since all EU regulations are to be incorporated into UK law on exit, so nothing will have changed in terms of standards when we leave. And any departures from those standards (probably not imminent) will not be clandestine but by well publicised statute or statutory instrument.
Whether or not UK food exports will be hit by extra customs controls as well as tariffs, there’s an apparently obvious solution in that, if there’s a reduction in the flow of food from EU farmers supported by our CAP contributions, there’ll be more space on our shelves for us to buy and consume home produce. True, that will not be sufficient to help us as consumers because, as the British Retail Consortium tells us, “in March, the situation becomes more acute as UK produce is out of season [so] at that time of year, 90% of lettuces, 80% of tomatoes and 70% of soft fruit sold in the UK is grown in the EU”.
Of course, the potential starvation and deaths to which the food retailers and Imperial College refer relates not to the processing by Calais of imports into the EU from the UK, as discussed above, but to the processing through Calais of EU food exports to the UK and I’m puzzled as to why French customs are interested in produce leaving France and what they might need to do differently post-Brexit. In any event, it would be very surprising indeed if the EU didn’t do its utmost to ensure the continued smooth delivery of agricultural produce to its biggest customer. Where does all this nonsense come from?
But back to the Irish border, and Sabine Weyand’s description of the EU’s stance – captured on film here – is of great assistance and significance. She makes statements that, on the face of it, don’t seem to be capable of being reconciled.
On the one hand she says [at 11:44] that “there are ways out by alternative arrangements” but then a few seconds later [at 12:00] says, referring to the Brady amendment, that “they don’t exist”.
She says [at 10:15] that “technological solutions are not enough to do away with the border” but [at 12:30] opines that during the transition period they will discuss “what additional facilitative measures will be needed on the Irish border in order to do away with a hard border”.
It seems to me that all Theresa May has to do in her negotiations is to draw attention to that last statement and emphasise that that is all that we are asking for – namely that there is no need for the backstop because it is agreed that the border will be policed by soft border controls using such facilitative measures as are deemed necessary.
The Irish say the backstop is essential because they think that, without it, there will need to be a hard border. But there doesn’t need to be – as Michel Barnier has now admitted.
What are the EU afraid of? Soft border controls are in use now at the Irish border – a combination of administrative cooperation, whistle-blowing, auditing and site raids by customs, tax and regulatory enforcement officials, all supplemented by occasional random spot-checks on roads leading up to and cameras at the border.
The thoroughness of such controls is a matter of degree. No border is fool-proof as only a very small proportion of cross-border consignments is ever physically checked, even at hard borders. By the end of the transition period, the Irish border could be controlled by the system of checks by then developed and, if either party considers that more robust controls are required, the nature and timing of such further improvements could be settled by agreement or arbitration. A no-deal scenario would remove that head start, but the same evolution process would apply.
It is only the nature of the goods and produce crossing that border that can be of relevance. Other aspects of the Free Trade Agreement, such as access to fisheries, have no relevance whatsoever to agreeing appropriate controls on movements across for the Irish border.
Currently the UK is in full alignment with EU standards. Any future divergence will require monitoring. If, say, chlorine-washed chicken is permitted in the UK but not in the EU, that fact will be known to and respected by reputable suppliers. If considered necessary, regular supply chains can be monitored at the origin or destination.
Whether the backstop has been invoked is of no relevance to the ability to combat smuggling. Smuggling can be detected and deterred, as at a hard border, only by intelligence and random checks, methods that are already employed at the Irish border, for example, to inhibit VAT evasion.
Rejection of a legally binding agreement that the border will be policed by soft border controls will demonstrate beyond doubt that Parliament was right to reject Mrs May’s Withdrawal Agreement but, furthermore, that even without the backstop, we cannot proceed with negotiations in a situation where the Irish border question remains open – since it will only be closed by a long-term arrangement that replicates the backstop. The only solution is to close the issue now by presenting the EU with a fait accompli on 29th March.
The EU’s position is so ludicrously irrational that it can have only one of two explanations. The first is that they are unbelievably stupid. The alternative is that they regard it as totally impossible that the UK will leave the EU without a deal (and thus the currently offered deal) – but that is despite saying, publicly, that they now see no deal as becoming an increasing possibility.
Since this makes no sense whatsoever, I am confident that, as David Davis told the Exiting the EU Select Committee back in October 2017:
“It’s no secret that the way the union makes its decision tends to be at the 59th minute of the 11th hour of the 11th day and so on, and that is precisely what I would expect to happen… If there is a time limit on a negotiation the union stops the clock, it assumes that it’s still at 11:59 until it is concluded, sometimes over the course of 24, 36, 72 hours thereafter and that’s what I imagine it will be.”
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This is the text of a speech delivered by David Davis to Economists for Free Trade on 28th November
The cliché that Britain stands at a crossroads is, for once, true. The decision we take in Parliament in a couple of weeks’ time will shape the future of our country for decades to come. To borrow a line from the Prime Minister, Brexit is within our grasp but perhaps not as she intends it.
If we reject the Prime Minister’s proposed agreement, we can take back control and set ourselves on the path to reclaiming our independence.
If we accept her agreement, we would repudiate the declared wishes of the majority of the British people. Wishes expressed in a referendum in which more voted than at any time in our history. The damage that would do to our democracy is incalculable. Trust in the political process and politicians would be dealt a cruel, crippling blow.
It will come as little surprise to you to learn that I will be voting against the agreement. From the beginning of the year there has been a long struggle, in government, between two views of Brexit. On one side, there are those who hope that extreme conciliation would buy a cooperative response from the EU. On the other stand those of us who take a more robust view of the economic freedoms needed to crystallise the benefits of Brexit. Much of this surfaced in the first clash at Chequers, in February, when the Cabinet Committee agreed we should insist on the “right to diverge.” I strove for a deal that would respect the outcome of the referendum.
After the decision at Chequers in July – Chequers 2 if you like – I knew that was not possible. I resigned to continue the fight on a different battleground. I acted to ensure that Brexit did indeed mean Brexit, and that Britain would resume her place in the world as an independent nation state free to shape its destiny.
I do not dispute that Theresa May has fought tirelessly and genuinely for what she believes is a good deal for Britain.
But the Government’s favoured road away from this crossroads is a denial of the restoration of sovereignty that underpinned the vote to Leave. It keeps us in the customs union potentially indefinitely. It makes us subject to the rules of the EU’s single market while denying us any power to influence those rules. It annexes Northern Ireland, part of our sovereign territory, into the Single Market regulatory structure. It will cost us £39 billion and rising. It sets the European Court of Justice, a foreign court, superior to our own.
It deprives us of one of the chief economic benefits of Brexit by preventing us striking free trade deals with fast-growing countries and markets across the globe.
Worst of all – it makes us prisoners of a Hotel California customs union. We can check out any time we like but we can never leave. This gives them unbelievable negotiating leverage on every single issue – as the EU negotiators have bragged to Brussels ambassadors.
And the other road? I will not pretend it is free of bumps and turns. But these are essentially short-term obstacles. We should press for an exit on a Canada-plus-plus-plus free trade basis. If that is denied to us by the intransigence of Brussels, we will have to leave on World Trade Organisation terms.
At this point all the choking tentacles of the EU fall away. No customs union. No backstop. No single market. No denial of new trade deals. No money paid over. No threat to the integrity of the Union.
These are the two main choices facing Members of Parliament as they prepare to pass judgement on the Government’s proposals next month.
Today, I want to look into the critical few weeks ahead, offer my view to the British public and to my parliamentary colleagues of what to expect, and urge them to stand firm in the face of the propaganda onslaught that is about to be unleashed.
The Government cannot currently expect to win the meaningful vote on their deal. To date, over 90 Conservative MPs have publicly declared an intention to oppose the agreement. With Labour, the SNP and the Liberal Democrats also lined up against – and with the DUP infuriated by the threat to the Union – defeat for the Government seems inevitable.
This may be so. But a couple of weeks in politics are a long time. And as Charles Moore observed in The Daily Telegraph at the weekend, parliamentary rebellions have a habit of melting away.
And, of course, Downing Street, the whips, the Treasury and the rest of the establishment have yet to do their best – or worst.
We are on track for a condensed version of the referendum campaign of 2016, along with all the lies, half-truths, exaggerations, spin and scare tactics.
Ultimately, this time, the decision rests with Parliament. This includes a Commons and a Lords that was overwhelmingly for Remain a couple of years ago.
Nor are the public to be left out of the propaganda operation. Downing Street has noticed that many of its troops are deserting to the Brexit camp, so the Prime Minister has headed for the airwaves. She’s doing more phone-in programmes than Nigel Farage.
Her aim is to appeal over the heads of recalcitrant Tory MPs in the hope that the public will pressure dissidents into backing the deal. The first shots came at the weekend with headlines about a new post-Brexit crackdown on unskilled migration from the EU.
Maybe, or maybe not, I think. Migration policy is a matter to be decided after the Withdrawal Agreement has been enshrined in law. It is covered by the non-binding – and decidedly woolly – Political Declaration. It is also almost certainly destined to become a bargaining chip, used by the EU after the legally binding part of the deal comes into effect.
“Want to protect your fishing grounds? Then relax the cap on Romanian workers.” This is the kind of haggling we can confidently expect.
In any case, I have my doubts about the wisdom of Downing Street’s strategy. Of course, our inability to control EU migration was a significant factor in the vote to leave. But it was not the fundamental reason – that was all about reclaiming national independence from Brussels. This was never just about immigration. It was always about control. It was always about democracy.
Like last time, the decisive battle will be fought on the economy. The bullets will fly fastest when we come to argue about the relative merits of the Government’s Brexit in Name Only approach and the Clean Brexit favoured by those, like me, who are determined to respect the referendum result.
Downing Street and the Treasury believe that they are on their strongest ground when they are lined up alongside Big Business and the City. These multinationals and big corporations, led by CEOs with multi-million pound bonuses riding on the next couple of years performance, unsurprisingly favour absolute stability in the short term over long-term opportunity. And, of course, they find that the current EU arrangements work splendidly for them – not least because they help to freeze out competition from smaller, more nimble firms.
Project Fear is set for a last hurrah.
The Treasury and the Bank of England will later today be issuing new forecasts comparing the Government’s Fake Brexit deal with a WTO exit.
I don’t often quote the FT, but I will do it this time: “Theresa May is preparing to use an economic assessment of her much-criticised Brexit deal to try to win over sceptical MPs.”
The FT makes no comment about the reliability of the Treasury’s last attempt at playing Mystic Meg.
My point is simple enough. The Treasury’s forecasts in the past have almost never been right and have more often been dramatically wrong.
The Treasury forecasts for the effects of a Leave vote made in May 2016 are these. They said that in the 18 months after the referendum the economy would contract by at best 0.1 per cent and at worst 2.1 per cent. What happened? It grew by 2.8 per cent.
The Treasury was wrong to the tune of between 2.9 – 4.9 per cent. This is a sum of up to £100 billion. Quite a lot of money. Quite a big mistake.
Of course, not all of us are brilliant at computing percentages of GDP, so George Osborne spelled out the numbers in starker terms. Unemployment would jump by 520,000 under the “cautious” projection and by 820,000 if the exit was on WTO terms. Voting to leave the EU would, over time, render the average UK family £4,300 a year worse off.
Osborne also used a visit to B&Q’s head office to predict a “Do-It-Yourself” recession as a result of a Leave vote. He prophesised falling house prices and severe damage to the public finances. A “punishment Budget” featuring tax rises and spending cuts was on the cards immediately after a Leave vote. Astonishing idea, of course, to respond to an expected downturn by clamping on a tight fiscal squeeze.
Needless to say, none of this spine-chilling nonsense came to pass. Families are no worse off and the economy has since grown by around 4 per cent. Unemployment has fallen by hundreds of thousands.
Earlier this year, the Treasury leaked its “Cross-Whitehall Brexit Analysis” in the shape of 24 PowerPoint slides to the website Buzzfeed. It caused quite a buzz – not least because it now predicts a huge 7.7 per cent of GDP hit to the economy in the event of a WTO exit. An exit with a Canada-plus deal was forecast to be painful, too, with GDP 4.8 per cent smaller than would be the case if we stayed in the EU.
Quite why the Treasury and its offshoots get things so wrong is an intriguing question.
The truth is that the Treasury is more often wrong than right. And the same goes for the OBR. They missed reality in 2009 by almost 6 per cent. That is equivalent to a miss of £120 billion today.
George Osborne was initially predicted to be more than 50 per cent likely to eliminate the deficit. The productivity growth forecasts of 2010 were 6 times larger than reality. The UK was supposed to enter a recession if there was a vote to leave the EU.
And just this year it emerged that the OBR’s previously predicted borrowing for 2017/18 would be £16 billion more than the out-turn. It is amazing the amount of money Whitehall finds down the back of the sofa.
Unsurprisingly, the dramatic numbers take the headlines, and people fail to notice that they are caused by forecasting errors.
Take Osborne’s £27 billion windfall in 2015, for example. The Chancellor hurriedly moved to spend it on tax credits and departmental budgets.
But, just a year later, he had to take it back. The OBR had undershot their borrowing forecasts by some £58 billion. As the OBR boss, Robert Chote, said at the time, “what the sofa gives, the sofa can also take away.”
But don’t take my word for it. I see from the Prime Minister’s interview with the Sun that she also has doubts about the Treasury and its forecasts. After all, and I quote, “they don’t always reflect every factor that can be taken into account… these things are always based on a set of assumptions.”
And it is notable – and frankly disgraceful – that the Chancellor has done his studio round today without publishing the underlying assumptions. Remember: forecasts are not facts: and theses are just polemical projections.
Professor Minford, of the Economists for Free Trade, has sought to explain the forecasting errors. First, he believes that the Treasury’s past reliance on the gravity model of trade has led it astray. A word on the gravity model, this assumes that trade flows are highest – and the economic benefits are greatest – when trading partners are in close geographical proximity. Europe is on our doorstep, ergo trade deals with the EU are of more value than those with more distant lands. This was possibly true when the commodities were bulky, heavy and of moderate value – coal, steel, wheat, sugar, for example – and the cost of transport was a significant proportion of the product cost. But not today.
The alternative model, the classical one developed by Ricardo in the 19th Century, assuming high competition across world markets, better fits the modern facts and predicts bigger gains from global trading on WTO terms. Transport costs are a tiny fraction of the cost of, say, an iPhone – or a near zero fraction of trade in services. This has the effect of making the entire globe the market in which we exercise comparative advantage.
Other things matter more than distance – a common language, for example, or communication links.
The good news is that – following strong criticism – the Treasury claims to recognise the limitations of its gravity model and has now switched to an improved alternative. But it has undermined its own work. If they are the same as previous work this year the assumptions it has fed in to this new model are faulty for three crucial reasons.
Firstly, the Treasury’s Cross-Whitehall analysis has made pessimistic assumptions about the positive effects of free trade on UK growth. If the UK were to adopt global free trade, the forecast predicts modest long-term gains of as low as 0.3 per cent of GDP.
This is extraordinary. One of the few things upon which economists agree is the great beneficial effect of free trade. Australia’s trade liberalisation delivered a 5.4 per cent long-term boost to GDP. This figure corroborates the Economists for Free Trade calculation of a 4 per cent boost for the UK.
The Treasury seems to assume that free trade matters when it is with the EU, but not when it is with anybody else.
The second flawed assumption in the Whitehall analysis is that there will be high border costs, from processing customs declarations and rules of origin certificates. They believe there will be extensive physical inspections at the border, even under a UK-EU free trade arrangement. This belies the way modern computerised pre-declared border procedures actually work. After all, only two to three per cent of goods are ever inspected.
Unlike the 6 per cent cost assumed by Whitehall, modern border costs are typically well under 1 per cent of the value of goods – and Switzerland measures its actual cost to be only about 0.1%.
Finally, Whitehall’s third flawed assumption is the belief that various non-tariff barriers will spring up immediately after Brexit. But after decades of integration, it’s absurd to suggest the EU will suddenly decide that our regulations aren’t good enough.
Whitehall assumes the cost of such NTBs will be equivalent to a 16 per cent tariff if we have a free trade agreement and 20 per cent if we leave under WTO rules.
These figures are truly massive. The total effect of Whitehall’s assumptions is that the UK – beginning with identical product standards and regulations – would face an effective EU tariff of about 30 per cent under WTO rules. This is about one and a half times the actual tariff faced by the US. Of course, given that we currently have shared product standards, this would be illegal under WTO rules.
These flawed assumptions have led to Whitehall’s central forecast – a 6% loss of GDP under WTO rules. Using the same modelling approach but with more reasonable assumptions, Economists for Free Trade calculates a GDP boost of about 3 per cent.
This helps to explain why the Treasury’s latest stab at forecasting produced a result fully in line with the 2016 version of Project Fear.
The Treasury insists that leaving the Single Market and customs union would do grave damage to the economy due to the loss of trade. However, it also insists that signing FTAs with other major world economies would do little good. Talk about facing two ways at once.
There is another problem with the Whitehall analysis that must be considered. There is a consistent overestimation of the positive impact the Single Market has on the British economy.
The Single Market was touted as a “vital national interest” during the referendum campaign. Project Fear constantly pushed doom-laden messages of economic ruin following a Leave vote.
However, this belief has no basis. The Single Market’s regulations are much less beneficial than assumed for the British economy.
Its rules are rigged in favour of big corporations. It suppresses innovation, competition and growth.
Sober analysis of the trading relationship between the UK and the EU spectacularly dispels the myth that the Single Market is vital for the British economy.
The researcher, Michael Burrage demonstrates that growth of UK exports to the EU has been lower during the era of the Single Market than it was during the common market decades between 1973 and 1992. Our export growth to the EU lags far behind much of the world. We are surpassed by many countries that trade with the EU on WTO terms.
Moreover, UK exports to non-EU countries under WTO based rules have grown four times faster than UK exports to the EU.
As Burrage’s work shows, EU-UK trade has been steadily declining whilst UK trade with the rest of the world has been rapidly increasing. The future of the UK economy does not lie with the European Union but with the wider world.
Contrary to the Whitehall dogma, the Single Market has not been the accelerator claimed for the British economy. We must stop worshipping at the altar of false gods.
Everyone supports evidence-based policy-making, but only the Treasury supports policy-led evidence.
Of course, apocalyptic Treasury forecasts of the grim effects of leaving the EU’s orbit are only part of Whitehall’s armoury of intimidation.
Plenty more will be hurled in the direction of MPs considering voting against the Government’s deal. Cheered on by the establishment media, we will be warned against “crashing out” of the EU and tumbling over a “cliff edge”.
They’ve claimed that planes will be grounded, and hauliers will suffer unprecedented delays. There’s been vehement insistence that Kent will become a lorry park, and hysteria over the rationing of food and medicine. Even Mars Bars will apparently become a thing of the past.
For example, the Healthcare Distribution Association has claimed that the UK will run out of insulin. However, when Channel 4’s Fact Check spoke to the UK’s leading suppliers (Sanofi, Novo Nordisk and Lilly) the companies all said that they don’t expect significant problems in the event of a no-deal Brexit.
Another foolhardy claim is that the UK will run out of food “within days”. Allegedly this would be because of a paralysed Port of Dover. Nothing, apparently, would be able to get into the country.
We’ve had long-term stoppages before, such as 26 days through the summer of 2015. Whilst this was costly, it was not as crippling as the wilder claims have inferred.
As my colleague John Redwood has pointed out, this is all nonsense. The EU is running a near £100 billion a year trade surplus in goods with the UK. The implication of this is just as we work to eliminate problems at the border, so will our European colleagues in Calais, Zeebrugge, Antwerp and Rotterdam.
If Parliament rejects the Governments’ current proposal, then the Government can press for a Canada-plus free trade deal backed by technical solutions on the Irish border. If intransigence from Brussels denies this, we should announce an exit on WTO terms and accelerate preparations for such an outcome.
I am afraid we must be ready for Project Fear 2.0. In a desperate attempt to reverse the result of the 2016 referendum, we are undoubtedly going to hear the most hair-raising stories and improbable forecasts.
Let’s remind those who might waver that we have heard this all before. Let’s expose the glaring weaknesses of the Government’s Fake Brexit. Let’s highlight alternative analyses showing that a World Trade Deal can work for us as it does the vast majority of countries.
“Trust the people” is an old Tory adage. Well, the people were right in 2016 and they are right today.
The task facing the Conservative Party, the governing party, is to deliver the will of the people as set out in June 2016. That means Brexit – and it means a clean Brexit that ensures a decisive break from the influence of a foreign power.
Downing Street and the Treasury will argue they are delivering a clean Brexit. But the facts point in the opposite direction. The Withdrawal Agreement and the Political Declaration are a bogus prospectus. They will keep Britain in orbit around the EU. We will be nothing more than a satellite state ruled from afar.
It is our duty to reject that prospectus and genuinely take back control
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