Friday, 5 June 2020

Extension is the Brexiters’ chance to show they accept that they won

With the last week of talks prior to the end of June cut-off for agreeing an extension finishing today, there is no sign (£) of progress towards a deal and no sign of UK willingness to extend the Transition Period. At the end of the first week of talks, just as coronavirus was beginning to bite in Europe, I speculated that we might see a less bellicose and more flexible approach adopted by the UK, including on transition period extension. I was wrong. Indeed since then, as the rational case for extension has grown because of the deepening coronavirus crisis, the government’s refusal to even acknowledge that case has hardened. Is that likely to change?

Business voices

There is strong public support for an extension. But it probably isn’t the kind of issue that has individual voters writing in huge numbers to their MPs (for whatever effect that would have) and so any pressure to extend will come from elsewhere. I remarked in passing in my last post that it would be easier for Keir Starmer to call for an extension were business and civil society institutions to do so, and a couple of weeks back that businesses might be wary about this given their present dependence on government. That latter analysis was supported by Delphine Strauss writing in the FT this week (£) and Charles Grant, Director of the Centre for European Reform, reports that business leaders aren’t willing to speak out “for fear of punishment by Number 10”.

Such fears are no doubt well justified. Long before Brexit, and before even the decision to hold a referendum, arch-Brexiter John Redwood threatened (£) “to punish businesses that speak out in favour of Britain remaining in the EU”. Subsequent to the referendum, companies bidding for government contracts were asked if they backed Brexit. And at the present time we can see government contracts being awarded to firms which had prior connections to the Vote Leave campaign. In a landscape where fealty to the true cause of Brexit is the sole qualification for political office, it hardly strains credulity that the same criterion might be applied in other contexts.

As the deadline for extension gets closer, there are the beginnings of some rumblings, for example from the CBI, of real alarm. Carolyn Fairbairn, its Director-General, wrote this week that many businesses “are not remotely prepared” for “a chaotic change in EU trading relations in seven months”. She was apparently referring to a no deal scenario but, actually, the chaos would hardly be less in the event of a deal being done, for this would still represent a sea-change from the current situation of single market and customs union membership. And Nissan – whose Sunderland factory plays an iconic role within the Brexit saga – warned in perhaps its starkest public terms yet that if tariffs are introduced the plant will be unsustainable.

Why hasn’t business had more influence?

Such statements may become more common if, as Brendan Donnelly of Federal Trust cogently argued this week, people are belatedly waking up to the strong possibility of there being no deal at the end of transition.  Yet even if the business community becomes more vocal there are doubts as to whether it can make much difference to how the government proceeds. Indeed the lack of influence it has had on Brexit throughout is remarkable, and a marked contrast to its role in the 1975 Referendum. That is all the more extraordinary given the way that, in the intervening decades, the priorities of business have had such political prominence.

There are several, quite complex, strands which explain this relative lack of impact. Perhaps one was that, indeed, people had got fed up with being told for so long that business interests were paramount.  Another is the extent to which British businesses have over those decades been sold off to overseas conglomerates. For them, whilst Brexit may be undesirable because of the disruption, it is not existential. Their opposition is driven, perfectly understandably, by considerations of cost not of principle (though Japanese firms also see Brexit as a betrayal of trust). They can and will decamp or divest if it becomes necessary. It is an irony that some Brexiters imagine that big business does not support Brexit because it does not care about what is good for Britain when the reality is that its lack of such care is one reason why Brexit is bad for Britain.

Not only did such global businesses lack genuine passion in their opposition to Brexit they also, for the same reason, did not place it at the top of their list of priorities. In particular, come 2019, they saw a Corbyn government as more of a threat to them than Brexit. They also saw the possibilities of government contracts – or exclusion from them – as a counterweight to the disruption of Brexit. The alliance between politically committed remainers and big business opponents of Brexit was always one of convenience and, ultimately, transitory.

The same is not neccessarily true of the thousands of small, domestic businesses who are opposed to Brexit – yes, on economic grounds, but with neither the escape hatch of relocation nor the detachment from British society of the big firms. But, by definition, it is harder for smaller businesses to have a loud voice. Representative bodies like the CBI have sought to be that voice, but in the process have become the target of massive hostility from both Conservative Brexiters and their cultural attack dogs in the media. Sometimes the two join hands, as when Priti Patel viciously attacked the award of a Damehood to Fairbairn as rewarding “her role in the Brexit betrayal” (as so often, reading this one might have thought that the Brexiters had lost).

There is a wider story here about how the modern Tory Party has become detached from almost all parts of the business community – except, perhaps, the hedge funds which are one segment that benefits from Brexit and which generously fund the party. The days when the Conservative benches would have plenty of people with intimate knowledge of business are long gone. It’s a similar story with its membership, perhaps because of its ageing profile. I had several conversations with some of them during the Referendum campaign, and they often spoke of their business experience but, invariably, it was decades out of date and showed no understanding of contemporary supply chains or international regulation. It is also strange how confident Brexiters have been in the lobbying power of ‘the German car industry’ at precisely the time they have been so dismissive of the concerns of its British counterpart.

The pernicious success of the ’Project Fear’ rebuttal

Be that as it may, business opposition to Brexit was also blunted by the extraordinary success of the ‘Project Fear’ rebuttal line (which, of course, was not just deployed against business). That success, which endures to this day, is difficult to explain. It seems to rely on the idea that any warning of any danger should be discounted, yet this is hardly how most people approach their daily lives.

It perhaps gained traction partly because the Remain campaign failed to articulate much in the way of a positive case for EU membership. It certainly relied on a constant argument ad absurdum, with warnings of, for example, damage to trade being rendered (and thus dismissed) as claims that all trade would cease. At all events, however successful it may have been as a campaign tactic, it has permanently crippled rational debate about Brexit, with any and every attempt to discuss, let alone address, practical difficulties being blasted away by its ovine repetition.

Additionally, at least during the Referendum campaign itself, and, I think, thereafter, the business voice against Brexit was muffled by media coverage. More than any other area, it suffered from the application of the ‘balance’ formula by the BBC and others. For, invariably, whenever business leaders spoke against Brexit they were then counterposed with a pro-Brexit business person. That may have ‘balanced’ the arguments, but it presented a seriously unbalanced picture of where the business community, overall, stood on Brexit.

Apart from the evidence of numerous surveys, the clue to that being so is that the pro-Brexit business people were always drawn from the same handful or so: Tim Martin, Anthony Bamford, James Dyson, Digby Jones, Rocco Forte and a few others. It happened precisely because there were so few of them.

The paucity of business support for Brexit is underscored by the failure to create a significant pro-Brexit business organization. Despite being boosted as the voice of business by the likes of ERG self-styled ‘hardman’ Steve Baker, the Alliance of British Entrepreneurs – the creation of an intellectual property lawyer and someone invariably just described as ‘a veteran and businessman’ – has never really taken off and does “not offer formal ‘membership’”. There’s something rather telling about the speech marks around membership, as if to imply that lack of members is a principled choice to avoid something disreputable. One might also wonder what ‘informal’ membership entails. These are hardly picky points to raise about an organization that aspires to be representative.

In any case, the Project Fear line was fundamentally dishonest both in itself and in what it became an alibi for. It was dishonest in itself because it ignored or distorted the factual basis of the warnings. It is dishonest in what it became because it morphed into the claim that, by ignoring those warnings, leave voters had chosen economic damage in favour of ‘sovereignty’. Yet, clearly, the entire Project Fear narrative was about discrediting those warnings; that there was nothing to ‘fear’. And why? Because the Vote Leave campaigners knew full well that if voters realized the economic damage Brexit would cause then they would never have voted for it simply on grounds of sovereignty. Otherwise, they would have simply agreed that there would be that damage and invited voters to support the policy anyway.

Whilst Project Fear was a potent way of neutering business opposition to Brexit before the Referendum, afterwards the populist neck-hold of ‘the will of the people’ was the main way of choking the business voice. If the judiciary and civil service could be traduced in that way, how much more difficult would it be for businesses reliant not just, possibly, on government favours but, almost certainly, on customers who might punish them as ‘saboteurs’? Safer to keep quiet. And of course the same situation obtains for other civil society institutions such as trade unions, charities, universities, professional bodies and so on. All are vulnerable to economic punishment, cultural punishment, or both. And all will suspect that speaking out is likely to be in vain as they will automatically be dismissed as ‘the Establishment’. So why take the pain for little or no gain?

That same logic now carries over to voicing concerns about not extending the Transition Period. Since Brexiters have managed – illogically, because Brexit has, in a legal sense, happened – to depict such an extension as ‘thwarting’ Brexit they can also run all their old attack lines about Project Fear and the will of the people.

The post-Brexit landscape

Yet voices are being raised over extension, and not just those of business. This week the Social Market Foundation published a report undertaken for the Best for Britain campaign group showing the economic implications of ending the Transition Period without a deal in the context of the coronavirus crisis. Meanwhile, a House of Lords Committee catalogued the extensive problems in implementing the Northern Ireland Protocol by the end of the year and business groups there are expressing desperation about the lack of clarity about how the sea border is to work.

The Northern Ireland Assembly itself voted this week in favour of an extension until the coronavirus crisis is over, and Nicola Sturgeon has repeated her longstanding demand for extension. Mark Drakeford, the Welsh First Minister, did so several weeks ago and was joined this week by Sadiq Khan, the Mayor of London. The latter is significant in being the first major Labour figure to make this argument and, as discussed in my previous post, there are good reasons why Keir Starmer should follow suit.

These and other bodies and leaders are likely to become more vociferous this month as the window for agreeing an extension closes. If so, I think that despite their fears they might find that the landscape is rather different to that of even a few months ago, especially if they find a way to speak in concert (as the TUC and CBI did when warning of the national emergency of a no-deal Brexit in March 2019) rather than individually.

Of course those familiar Brexiter attack lines will continue to appeal to a significant segment of the public and the media. But the coronavirus crisis, the government’s inept handling of it, and its falling popularity as a result all serve to change the environment. Brexit just doesn’t dominate in the way that it did and it’s all but certain that a vote held today would reverse it. Outside of the minority who will always care about it, it’s yesterday’s issue. The Referendum mandate to leave the EU has been discharged and is now expired. That mandate had nothing to do with the length of the transition period and it most certainly wasn’t a licence not make a deal with the EU – as Michael Gove effectively admitted this week.

Extension isn’t remainers’ last stand, it’s Brexiters’ first challenge

Indeed, for this reason, even had the pandemic not struck we would still be in a new situation. For what Brexiters and, I suspect, some remainers seem not to have grasped is that the debate over extension is not the last, desperate gasp of the battle against Brexit. That battle was lost and is over. Rather, it is the first of what will be many post-Brexit rows about how to implement it.

These will be over all the myriad of issues relating to the future relationship with Europe – not just trade, but education, science, data, security and so on – which will still need to be implemented in detail if there is a deal, and which won’t simply go away if there isn’t. They will be over the impact of whatever trade deals may be negotiated with the US (£) and other countries. And they will be over the big picture issue of what the UK’s place in the world is post-Brexit, which is already being played out as we navigate the complex power-plays between the US, China and the EU, for example over Huawei.

The Brexiters have already found that winning the Referendum was just the beginning of a long and arduous journey – the more so for having no defined destination. They are now about to find that the act of leaving the EU, whilst marking the end of one phase of Brexit, was itself only the easiest part of the process. The first challenge has now arisen in the form of whether they will be pragmatic in finding a way to secure more time given the impact of coronavirus or whether they will remain forever in thrall to paranoid fears of ‘betrayal’.

It is a chance for them to show that, finally, they accept that they have won and that Brexit is happening. In the end it is their ability to do that, rather than any lobbying from business or opposition parties, which will determine what happens on extension. Now comprehensively in charge of government it is a chance for them, and especially Boris Johnson, to show that they have moved on from the culture war slogans that got them this far. But there is very little basis for optimism and, alas, it is far more likely that they will show that those slogans were all they ever had.

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