Friday, 25 February 2022

The dogs that caught the car

Since its use on the very day after the referendum, it has become a cliché to say that Brexiters are like ‘the dog that caught the car’, achieving something they had never expected and then did not know what to do with. That was obvious from the very first hours after the 2016 vote, when Johnson and Gove appeared on TV looking both shocked and scared.

Six years on, the Brexiters are still wondering what to do with their prize. More accurately, they are still arguing about it, because they were in fact the dogs, rather than the dog, that caught the car. Hence from the outset they have been clawing and biting each other over who holds the pure flame of true Brexit and who is a betrayer of the faith. Only at brief periods could they unite to snarl that they embodied the will of the people in order to scarify remainers.

Embarking on a national project which had no agreed definition or destination is the fatal flaw that has run through almost all that has followed, and its latest manifestation is this period of agonizing over the specifics of what to do with post-Brexit ‘freedoms’. As I began to discuss in last Friday’s post, this has been given particular impetus by the appointment of Jacob Rees-Mogg as Minister for Brexit Opportunities.

Rees-Mogg’s naive radicalism

That is partly because he is very clearly from the deregulatory, globalist wing of the Brexiters but also because of his political naivety. This has immediately come to the fore over the issue of conformity assessment marking. As I noted last week, Rees-Mogg appeared to endorse a proposal that the UK continue, unilaterally and indefinitely, to recognize the EU’s CE conformity assessment mark as valid for the UK market. More generally he seemed to accept that there could be other cases where the UK unilaterally accepted standards or regulations from the EU or other territories rather than duplicate them domestically.

This week, he unequivocally endorsed this position in an interview with The Times (£), stating that:

“I’m not an economic nationalist. I don’t think you want to use non-tariff barriers as a means to stop free trade. And doubling up on regulation is a non-tariff barrier. And it will be very bad for the UK because people will simply say, well, we’re not going to bother with that market.”

This has far-reaching implications, which are at once pragmatic and sensible, but also radical and dangerous. It is pragmatic in addressing the problems (discussed many times on this blog) which multiple companies and industry bodies have raised of the pointlessness and cost of regulatory duplication, including that of conformity assessment marking and registration. It also rightly recognizes that as well as being damaging for UK companies, it is a disincentive for overseas firms to export to the UK, and an extra cost if they do, thus decreasing choice and/or increasing prices for UK (or at least GB) consumers.

So far, so good. But the idea of unilateral abolition of non-tariff barriers (NTBs) is also a radical extension of the already radical doctrine of free-market Brexiters like Patrick Minford to unilaterally abolish tariffs. In a way, it is also a more sophisticated one, in that it recognizes the importance of NTBs in a way which Brexiters have so often failed to do in relation to the implications of leaving the single market. But by the same token, in being even less protectionist than Minford, it would open the UK up to global imports with even fewer safeguards, or ‘protections’, and with no reciprocity for UK exporters. This is not, as Rees-Mogg’s deceptive rhetoric would suggest, a matter of a few “pettifogging rules”.

Which then leads to questions of what will disappear or be damaged if not protected? One clue may be in Rees-Mogg’s careful phrasing about not being “an economic nationalist” – suggesting he may be another sort of nationalist and, quite likely, he subscribes to the kind of ‘Anglo-Saxon superiority’ complex discussed in relation to free trade ideology by Professor Gerhard Schnyder in a recent blog. The implication is that, regardless of the terms of trade, British businesses will triumph simply because they are British. Or, equally likely, beneath his carefully cultivated English fogey image lies the stone-cold heart of the global fund manager. From that perspective, British businesses and consumers will simply sink or swim as they can, which is clearly not what the more nationalist and protectionist amongst leave voters had in mind.

At all events, Rees-Mogg’s version of Brexit differs markedly to that of several of the other dogs in the pack. In particular, unilateral acceptance of others’, especially EU, standards and regulations is very much in contradiction to the emphasis of so many Brexiters on sovereignty, in the narrow meaning of the UK Parliament being the source of all that governs us. To take one, highly pertinent, example, on the Rees-Mogg approach, why on earth has the UK expended so much energy on resisting SPS alignment with the EU in the context of the Northern Ireland Protocol?

Small wonder, then, that there were immediately reports (£) that ‘Number 10’ has “distanced itself” from Rees-Mogg’s comments and that these comments did not imply any change in the government’s policy. This would seem to reflect Boris Johnson’s awareness of how radically Rees-Mogg is at odds with the broader Brexit ‘coalition’ that supports but also constrains his government. It also reflects Rees-Mogg’s failure to have understood where the vapid Brexiter talk of sovereignty has already led in terms of things like the conformity assessment fiasco. He hasn’t so much caught the car as missed the bus.

Why are we waiting?

The difficulties that Rees-Mogg’s early remarks have caused tell us something else. It’s not just about the contradictory overall framing of what Brexit means (e.g. in terms of globalism versus nationalism), it’s also about the mechanics of policymaking and delivery. In the case of conformity assessment, it fell to the Department for Business, Energy and Industrial Strategy (BEIS) to tell industry leaders this week, to their disappointment, that what Rees-Mogg had said did not indicate a change in policy.

For Rees-Mogg doesn’t run the government, even though his brief has implications across government. This might suggest that the entire idea of creating ‘Brexit opportunities’ as a ministerial specialism is rather stupid – or, perhaps, just a symbolic sop to the ever-restive ERG - when Brexit is now an endemic state. At the very least it means that whatever plans he may harbour can only be delivered through other departments, especially BEIS and the Treasury, and via the ‘government machine’ for which his only previous cabinet role as Leader of the House has ill-prepared him. So, to take a crucial example, whilst he talked in his interview about wanting to “look at” employment protections Rees-Mogg isn’t in a position to do this himself. These political and processual constraints on regulatory change are a reminder that Brexit has not suspended or over-ridden ‘normal politics’.

This infuriates Brexiters, with Iain Duncan Smith this week denouncing the government for having “done sweet FA” about his TIGRR proposals of last year. Sometimes, they blame Johnson’s lack of resolve – perhaps because, according Nigel Farage, he is “a Remainer at heart”, although the reality is that at heart he believes in nothing but his own interests. Other times, the fault is seen to lie with the inertia, or even resistance, of the civil service, perhaps especially the Treasury. Again, it’s a familiar refrain from the last six years, with the denunciation of ‘Theresa the Remainer’ and of individual civil servants like Olly Robbins, as well as the civil service as a whole. Naturally nothing is ever the Brexiters’ fault, nor their responsibility.

What they are only very slowly starting to recognize, and then only when forced by events, is just how complex it is to drive this ‘car’ they have caught and how unavailing their simplistic nostrums are when faced with this complexity. Last week, I discussed in some detail the case of gene editing regulation as an example of the Brexiter idea that new, high-tech industries are where independent regulation will be successful. I finished by quoting the ‘Bioscience’ section (pp. 48-50) of the UK in a Changing Europe’s report on post-Brexit public policy, where Dr Adrian Ely explains that “in its rush to diverge on this issue, the government is coming to understand the complexities of reconfiguring a tightly interwoven set of technical, legal, and institutional arrangements, and the political challenges of balancing public opinion, strategic industries, and different trade interests”.

Solvency II reforms

It's this complexity – which is both technical and political, and political in both the narrow sense of process and the wider sense of competing interests and stakeholders - that Rees-Mogg is already running into and which he will keep running into. In last week’s post I also mentioned in passing the case of insurance companies’ solvency requirements, which has come to fore this week. It’s at almost the opposite end of the spectrum to gene editing, since the insurance industry is extremely long-established both in itself and in its regulation. But it’s also one of the Brexiters’ paradigmatic cases for their claim that ‘nimble’, independent UK regulation will yield Brexit dividends.

Again, it is a fiendishly technical area (some readers may want to skip – I only include some detail to demonstrate that it’s the details not the slogans that matter). The core issue is reform of the Solvency II regime and the rules this creates for insurance companies including how much capital they must hold in their reserves, the nature of the assets they are allowed to invest in, and how they calculate and report their liabilities and assets. Solvency II is an EU Directive (though to a considerable degree derived from UK regulation, and very much shaped by the UK when a member) which was in part a response to the 2008 financial crisis, although it only came into force in 2016. By regulating the quantity of reserves and the kinds of assets insurance companies can hold, it seeks to reduce the risk to policyholders and also to the financial system as a whole.

This week, the government (specifically, the Treasury – not Rees-Mogg) announced its long-trailed intention to “seize on its post-Brexit freedoms” to “slash this red tape”, the basic idea being that if insurance companies can invest more of their assets and with less restriction on what they can invest them in, then it will unlock a ‘bonanza’ of investment, with UK infrastructure and Net Zero projects a particular beneficiary (even though in other contexts Brexiters aren’t very keen on Net Zero). This will be achieved partly by cutting the amount of capital reserves insurers must hold and partly by allowing them to invest more in illiquid assets (like infrastructure projects) rather than holding liquid assets (like, in particular, bonds).

Are these changes (in broad terms – we don’t know the detail yet) desirable? As with the gene editing reform there are different views which, as with most regulatory questions, are to do with the balance of risk and benefit. An independent review of the Prudential Regulation Authority’s (PRA) Quantitative Impact Study (QIS) of possible changes to Solvency II (itself a response to the Treasury’s call for evidence on post-Brexit changes to insurance regulation) argues that these would actually hinder investment in infrastructure and other assets, and that there would be risks to the stability of insurers’ funds. Downstream, this could impact on income security for pensioners.

By contrast*, the outgoing Director-General of the Association of British Insurers argues that the risks to policyholders are over-stated and that the opportunities to contribute to decarbonising, amongst other things, must be weighed against them. Meanwhile, Bloomberg banking and finance columnist Paul Davies considers that in practice the changes will make little difference either to UK investment levels (because the real problem in the UK is lack of suitable projects to invest in, not lack of available funds) or to policyholder risks (because the UK has unusually high numbers of annuity policy holders, so the Bank of England, via the PRA, is unlikely to allow some of the technical changes that might otherwise be made).

As even this very cursory summary shows, not only are there different views there are also multiple actors and stakeholders, within and outside of government. It also shows that what sound like, and are, dry technical questions have potentially major impacts on the general public, for both good and ill. The government statement this week asserts that “protection for policyholders will remain a top priority”, but the word “a” does a lot of heavy lifting: the issue is balancing that protection against other priorities, especially that of expanding the types of investments that can be made and the amount available for such investments.

The reforms envisaged probably do entail slightly more theoretical risk for policyholders (and ultimately for the government). But even from a policyholder perspective that doesn’t necessarily make them a ‘bad idea’. If the existing regime is over-cautious and over-weights avoiding risk to policyholders then it may also be the detriment of policyholders’ interests as it can mean higher premiums and lower returns, for example for annuity holders, than would otherwise be the case.

Solvency II and Brexit

The head of the ABI also points out that (contrary to the rosy picture Brexiters paint) Brexit has done considerable damage to the UK insurance industry, and it will be compounded if Britain lags behind the EU on reforming Solvency II. This latter refers to the fact that – as, again, with gene editing - whilst being presented as a use of post-Brexit freedoms there are parallel developments underway in the EU, where the Commission has already produced similar draft proposals for consultation to those the government announced it would bring forward in April. Indeed there are criticisms, including from Rees-Mogg, that the UK is lagging behind the EU (£). On the other hand, as FT Lex columnist Andrew Whiffin points out, it means that these changes would be coming with or without Brexit.

As with my discussion of gene editing regulation, I don’t have the expertise to judge the merits of reforming Solvency II, though perhaps slightly more in this case, as I wrote a PhD on the regulation of, specifically, life insurance (but that was 30 years ago so, although many of the principles are familiar, the specific details have changed almost beyond recognition, especially as regards the EU). For what very little it’s worth I think the current regime probably is excessively cautious (and that, as regards pensions, there are far more significant risks than insurers’ solvency, especially those of mis-selling) but it is really a judgement call. However, my point here is that the insurance case poses similarly fundamental questions about post-Brexit regulation to those arising from gene editing.

Of course it is inevitable that the government will trumpet, as it has already started to, any changes that are made as some huge triumph of post-Brexit freedom to impress its core voters. But the real questions include: will the outcome be much, or any, different to having been an EU member? If there are benefits that accrue that wouldn’t have been possible but for Brexit, how do they compare with the costs of Brexit to the insurance industry and more widely? Can the UK really be quicker in making changes because it acts alone, and does being quicker really matter? As Helen Thomas, the Financial Times’ Business columnist, writes of Solvency II reform (£) “the implication that it is important that Britain go further and faster than its nearest neighbours is a concern … a few months at this stage makes little difference except in the fevered minds of politicians seeking a Brexit dividend”.

Perhaps a meta-question, which relates to the question of speed and the supposed ‘nimbleness’ that independence from the EU brings, is whether the UK state has the administrative bandwidth to undertake huge and complex regulatory reforms across multiple sectors of the economy simultaneously**? That last question becomes all the sharper considering Rees-Mogg’s other main statement in his Times interview, namely his desire, under the ‘government efficiency’ part of his portfolio, to slim down the civil service.

In the end, as in so many regulatory areas, but especially in insurance because of its often long-term nature, time will be the test. As was seen with the scandals over the mis-selling of endowment policies and PPI, it can take years or even decades for the effects of lax regulation to play out. I think it is quite likely that across a very wide range of areas, though probably not this particular one, future scandals will be seen to have been rooted in post-Brexit zeal. That zeal isn’t necessarily about de-regulation for, as I’ve argued before, whatever Rees-Mogg and the free marketers want, much of it will be about re-regulation. But the impetus will have been to demonstrate quick post-Brexit dividends by small or large changes to highly complex systems, with much scope for unanticipated consequences.

Northern Ireland Protocol and Ukraine

Finally, some brief comment on the Northern Ireland Protocol (NIP). That’s not entirely unrelated to regulation though because, in a way, the extent to which UK and EU goods regulations diverge is central.

I wrote an extra ‘unscheduled’ post on Monday responding to Iain Duncan Smith’s latest salvo against the NIP, which itself seemed design to pressure the government away from any compromise and towards even greater confrontation with the EU. But this week’s meeting of the Joint Committee seems to have been fairly harmonious, albeit with no ‘breakthrough’. That may mean nothing, but it prompts two thoughts.

One is just that, in general, Liz Truss is avoiding all of the combative speeches about the EU that her predecessor David Frost revelled in. That seems a good sign, as does the non-mention of the ECJ, which suggests that the government is continuing to row back on this belatedly introduced demand (goodness, how convoluted this is).

The other thought is that the abomination of the Russian attack on Ukraine may well help to reduce or even resolve UK-EU tensions over the NIP. Frost wrote a snide tweet this week jeering at the EU for being pre-occupied with ‘olive oil’ whilst working with the EU on matters of war and peace. But that cuts both ways. How can the UK government sustain the absurdity of regarding agreement to the Agri-food regulations of a friendly neighbour as an affront to sovereignty whilst witnessing the obscenity of a real, and brutal, violation of sovereignty? And why should the UK continue its dogmatic stance on the NIP when wanting to work constructively with the EU and the US to counter Russian aggression?***

Not only are the shared interests of the UK and the EU in this crisis obvious but also (if perhaps less creditably) I think that Johnson and Truss both enjoy the trappings of global statesmanship, and don’t want that sullied by ongoing and actually rather arcane disputes about customs checks. Nor does the international pariahdom that would follow from the Ultras’ proposal to rip up the NIP sit comfortably with being part, let alone a supposedly leading part, of an international coalition to uphold the rules-based order.

Meanwhile, the blatant Putin apologism on display from Nigel Farage and Arron Banks is a reminder of whose best interests two of the mangiest purse dogs in the Brexit pack most consistently serve.



*It’s much more complicated than I’ve presented it here – for example, it’s not that the independent review just mentioned is against Solvency II reforms and the D-G ABI in favour, rather that they are both engaged in a highly technical debate about the particular ways the PRA analysis approaches such reforms. On my reading, D-G ABI is making the point that if the PRA approached the issue differently, then the problems identified in the review need not arise. Thus the ‘contrast’ is really with the PRA QIS approach rather than with the review of it. But, for my purposes, the point is that this debate shows that what is at stake is a calibration of risks and rewards under different regulatory scenarios.

**It’s also, by the way, going to be completely beyond any one individual, such as me, to keep abreast of the multitude of proposed reforms and consultations that are likely to flood out in the next few months.

***For an initial discussion of the UK’s post-Brexit independent sanctions policy and Ukraine see my post of a month ago. More to come on this in the future, no doubt. Given the world-changing events of this week the self-imposed schism with the EU seems more stupid than ever.

Monday, 21 February 2022

Fisking Duncan Smith

In today’s Daily Mail one of the most longstanding and hard line Brexiters, the former Tory Party leader Sir Iain Duncan Smith, yet again put forward a series of arguments against the Northern Ireland Protocol (NIP).

It was no doubt timed to coincide with today’s ‘stocktaking meeting’ of the Joint Committee overseeing the NIP and is part of the ongoing attempt by the Brexit Ultras (£) to pressure Johnson’s government into ‘triggering Article 16’ or, even, simply scrapping the Protocol.


As such it has to be understood against the background of how, throughout the Brexit process, the Ultras have failed to understand or accept the implications of Brexit, and especially hard Brexit, for Northern Ireland and, in particular, the need for a border that hard Brexit causes. As such, it represents one of the core, and perhaps the most unforgiveable, example of the Brexiters' total irresponsibility in advocating a project the consequences of which they neither comprehended nor cared about. Elsewhere, I have written a detailed analysis of many of the twists and turns of this general background.

More specifically, it has to be understood against the background – shared by Duncan Smith and all current Tory MPs, as well as by the government – that the NIP formed part of the Withdrawal Agreement that Boris Johnson and David Frost negotiated with the EU in 2019. More than that, it was the part which was hailed as a triumph for being crucially different to Theresa May’s deal because it ‘got rid of the hated backstop’ and instead created a GB-NI border as part of the GB-EU border.

This was the ‘oven ready’ deal, endorsed by Duncan Smith, that Johnson and all Tory MPs campaigned for at the 2019 General Election. They then all voted in favour of it after they had won the election, and Johnson signed it as an international treaty in 2020. Duncan Smith, notoriously, derided the idea that the details of the agreement even needed to be extensively discussed by MPs as they were already well-understood. So Duncan Smith, quite as much as anyone else, is responsible for the NIP he now denounces.

And in case anyone thinks that the Ultras may have supported it without realising what its effects were going to be in practice then a) that shows gross dereliction of duty and b) is falsified by the fact that, from before its operations were even implemented, they were denouncing the entire Withdrawal Agreement, including the NIP, as not being ‘sovereignty compliant’. This can be seen in the July 2020 report from the Centre for Brexit Policy (of which Duncan Smith is a Fellow and some of the arguments in his article appear in that report).

In this post, I will discuss each of the claims or arguments that Duncan Smith makes. The article is reproduced in its entirety below. Duncan Smith’s text is in normal font within speech marks, with my discussion in italicised font beneath.

Duncan Smith’s Daily Mail article

"There can be few people who do not now realise how disastrous the Northern Ireland Protocol is for that part of the UK."

The latest detailed opinion poll evidence shows that the 52% of the Northern Irish public agree that the Northern Ireland Protocol is on balance a good thing for Northern Ireland, whilst 41% disagree. Even amongst unionists, only 11% think it is the most important issue in the forthcoming Assembly election.

"It is divisive, restrictive and is causing real harm to the local economy."

It is true that it is divisive in the sense that its core provision of an Irish Sea border creates a division within the UK single market and that this was done in the face of bitter opposition from many unionists, including the DUP, understandably so, because it offends their core political principle. Duncan Smith knew both of these things when he voted for the NIP. Indeed one can feel considerable sympathy for ordinary members of the unionist community who have been comprehensively let down by both the government and their political leaders. The DUP’s support for Brexit and handling of the real influence it had over the Brexit process is a story of extraordinary political failure. Equally, the process that forced Northern Ireland (like Scotland) to leave the EU against the wishes of the majority is a central problem, about which Smith says precisely nothing.

Claims of economic damage are usually based on the work of Dr Esmund Birnie of Ulster University, much cited by the DUP, but it is based on limited data and comparing the NIP with what would have been the case had Brexit not happened. The fact is that Brexit is economically damaging for the UK as a whole, but is likely to be less damaging in NI than for the rest of the UK, precisely because the Protocol means that NI remains in the European single market for goods, as well as being part of the UK (see also here (£), here (£)). Indeed ONS figures suggest that this is already happening, and the Protocol is protecting the NI economy. And NI manufacturers say that the Protocol is the least of their worries. Of course if Duncan Smith’s point is indeed that Brexit is economically damaging for the whole of the UK (and indeed the EU) then he is right.

"But this terrible arrangement is not just bad for that part of the realm – it’s bad for the rest of the UK as well.

That’s because, two years after we formally left the EU, the Protocol still gives Brussels a hold over wider UK policy-making."

Duncan Smith knew or should have known this when he voted for the Protocol.

"For example, it is probably fair to say that if it wasn’t for the pernicious effects of the Protocol, every family in Britain could be £100 a year better off from scrapping VAT on fuel bills.

After all, the power to set our own VAT rates was rightly hailed as one of the benefits of quitting the EU.

And with households facing a cost of living spike, driven by spiralling energy costs, the UK government knew that a cut in VAT on energy would help those struggling with their cost of living and deliver on our manifesto pledge.

But this very Tory-friendly, tax-cutting idea was effectively ruled out because it could not take effect in NI where VAT rates on domestic fuel bills must still match EU levels.

Allies of Chancellor Rishi Sunak may say the VAT cut was ruled out because it would also benefit wealthy people who didn’t need it.

However, thanks to the Protocol, it was also just too politically embarrassing for Ministers to deliver a tax cut which helped with spiralling energy bills in Great Britain but not in NI.

So torn between scrapping VAT in Great Britain and leaving Northern Ireland out, or doing nothing at all, the Government chose to leave VAT on energy in place."

This is what Johnson agreed and Duncan Smith knew or should have known it would be the effect of the Protocol. In any case it is speculative whether this is the reason the UK government isn’t cutting VAT on fuel.

"But that’s not all.

The Protocol also gives the EU power over whether the UK, post Brexit, can change our rules on the state aid we give to industry and the economy at large."

This is what Johnson agreed and Smith knew or should have known it when he voted for the Protocol.

"The EU claims the purpose of the protocol is to protect the Belfast/Good Friday agreement, (GFA) by keeping the north/south border open.

However ironically, the only people now threatening to re-introduce border checks between Northern Ireland and Ireland in the event of a dispute is the EU."

Presumably this is a reference to the brief few hours when the EU considered using Article 16 to halt vaccines being exported to NI. If so, it is not an ongoing threat, and it wouldn’t have entailed border checks, just the non-shipment of vaccines from Belgium. Conceivably, what Duncan Smith means is that if the UK unilaterally refused to implement Sea border checks, then land border checks might well be the only possible option left for the EU – but this is the core problem of Brexit as regards NI, and the reason for the NIP.

"The reality is that Brussels is trying to use the Protocol to do as much damage to the UK-wide single market as they can."

This is paranoid nonsense. Neither Brexit nor the NIP were desired by the EU. The NIP arises, in general, because of the problem Brexit created and, in its particular form, because Brexiters like Duncan Smith preferred it to Theresa May’s backstop. So, yes, it damages the UK single market – but he and others like him are to blame for that, as they are for refusing the EU’s offer of an SPS alignment deal (see below).

"Already the Protocol is leading to real economic harm in the NI economy."

As above, Brexit is harming the whole UK economy, but the NIP is mitigating some of that damage for NI.

"Trade is clearly being diverted to the Irish Republic in contravention of the agreement."

Diversion of trade is occurring but does not ‘contravene’ the agreement. It may be a ground on which to invoke Article 16, although even that is far from being an accomplished fact because it is a safeguarding measure against developments which were not reasonably foreseeable from the Protocol. In fact it was obvious, and should have been obvious to Duncan Smith when he voted for it, that the creation of an Irish Sea border was bound to result in diversion of trade because it created a barrier between GB and NI and GB and Ireland, but not Ireland and NI. But even if it were argued that is not so, all that Article 16 does is to create a temporary suspension of parts of the NIP pending a negotiated solution.

In any case, the mitigations which the EU has proposed would, if agreed by the UK, go a considerable way to reduce diversion of trade. And this would be even more so if the UK were to accept aligning with EU Sanitary and Phyto-sanitary (SPS) rules. This would resolve even more of the practical border issues and, at one stage, was lobbied for by the DUP. But Brexiters like Duncan Smith, and the British government, refuse this solution because of a dogmatic adherence to a very narrow idea of sovereignty. In this, they would now seem to be out of line with Jacob Rees-Mogg’s recent statements (£) that the UK should unilaterally accept some EU rules in order to reduce non-tariff barriers to trade.

"Furthermore, no less a figure than Lord Trimble, architect of the Good Friday Agreement, has made it very clear the EU is now damaging the social balance in Northern Ireland - again in contravention of the agreement."

If “the agreement” means the GFA then a court case has already rejected the argument that it is contravened by the Protocol. If (as implied by its following the point about trade diversion) it means the Protocol, then, as with diversion of trade, ‘societal difficulties’ would not ‘contravene’ but could be the basis for use of Article 16 – but, again, arguably not if the problems weren’t reasonably foreseeable and, again, even if Article 16 did apply all it would do is create a temporary suspension of parts of the NIP pending a negotiated solution. Since the UK and EU are already in negotiations, why does Duncan Smith imagine they would yield a different outcome if done via Article 16?

"There is already a better way to protect the GFA and keep the border open without border checks.

It is called ‘Mutual Enforcement’.

This involves both the EU and the UK mutually enforcing each other’s rules, regulations and taxes for companies exporting into each other’s territory.

Any company operating out of NI would be required to declare that it had met all the obligations contained in EU law when selling goods to the Republic of Ireland.

Any breach of that obligation would be followed up by the authorities in the UK and breaches would carry severe penalties as an effective disincentive to break that obligation, avoiding the need for border checks and safeguarding the integrity of the EU and UK’s internal markets."

This is nonsense. Mutual Enforcement has been endlessly proposed throughout the Brexit process and rejected because, in the words of Professor Katy Hayward of Queen’s University Belfast – a leading expert on the issue - it is not viable. It is simply absurd for the Brexiters to continue year after year to insist that it could provide a solution, or even that it ‘should’. It’s way past time for Duncan Smith and the Ultras to get real.

"The EU’s refusal to discuss replacing the Protocol, flies in the face of the existing agreement.

It was always expected that the Protocol would be temporary.

Article 13.8 of the Protocol makes it clear the protocol can be replaced."

This is nonsense. The Protocol was always intended to be permanent, and as a ‘frontstop’ not a ‘backstop’ – the first resort not the last resort. It can be replaced by a future agreement, but there is no obligation on either the EU or the UK to make (or even to discuss) a different agreement, and until such time as they choose to do so the NIP stands as permanent. If by ‘expected’ Duncan Smith means he believed the assurances which Steve Baker says were given to Tory backbenchers by Dominic Cummings and Michael Gove that the Withdrawal Agreement could be changed later then he is a fool. It was an international treaty, not some trivial document.

"Furthermore, Article 16 of the Protocol states that unilateral action can take place if there are, ‘serious economic, societal or environmental difficulties or diversion of trade’.

All are now present in Northern Ireland."

As discussed above, it is questionable whether these conditions have been met but, even if so, the unilateral action Article 16 allows is limited and temporary and, in itself, solves nothing.

"As I have said, this isn’t just a matter for those living in Northern Ireland but for the whole UK.

The very idea that a part of the UK should find itself subject to the authority of another collection of states on things as important as taxes, without having a say in the decision, is terrible.

Yet that has become the case."

This is what the government agreed and Duncan Smith voted for.

"Whatever happened to no taxation without representation?"

If this refers to things like VAT on energy in NI, then what happened is that Duncan Smith and the government agreed to end it.

"This is why I say it is time for the UK government to show some courage, take unilateral action and end the protocol."

If this means the unilateral action enabled by Article 16, then that doesn’t allow the UK to “end the Protocol”. If, as seems likely, Duncan Smith means unilaterally end the Protocol then this would violate international law, risk significant sanctions from the EU, create a major rupture with the US, jeopardise the GFA and have serious risks for security in NI and perhaps the whole of the UK. It would be an act of gross irresponsibility.

"If the EU really cared about the Good Friday Agreement, it would immediately engage in discussions to replace this temporary arrangement with a much better solution, such as Mutual Enforcement."

In other words, back to the same old problems Brexit poses for NI with no workable solution. And, actually, it is worse than that. One of the big stumbling blocks to Mutual Enforcement is that it requires high levels of trust from the EU. So the proposal that the UK unilaterally ripping up the international treaty it signed only two years ago would somehow be a route to this already rejected solution is a sign of, at best, grotesque stupidity.

"If not, we have to ask ourselves: whatever happened to no taxation without representation?" 

See above.

Final thoughts

There’s nothing new in Duncan Smith’s article – he and others of his persuasion have made virtually identical arguments for years now. So why bother with them? Partly precisely because they are not new, and in this sense show the utter intellectual bankruptcy of the Brexit Ultras. But of course they don’t repeat them simply though stupidity. They do so because experience has shown them that if they keep hammering their demands they may well get them met, especially by an enfeebled government. It’s therefore worth challenging them, even though it is boring.

However, the issue goes well beyond being boring. Firstly, it is the refusal to accept what the government agreed to in the NIP which more than anything else has poisoned UK-EU post-Brexit relationships, to all our detriments. To understand that, it’s worth imagining what Smith and the Ultras would be saying if it had been the EU which had immediately reneged on some crucial part of the Withdrawal Agreement.

Secondly, as Patrick Cockburn has recently argued, this running sore means that the government, egged on by the Brexit Ultras outside government, are creating “a permanent condition of crisis” in NI. He suggests that whereas the unionist community might have regretfully accepted the NIP (as indeed implied by their earlier desire to accept SPS alignment), the constant suggestion that the UK might renege on it has actually fanned their opposition.

It is for this reason that Duncan Smith’s article, and, if only there was time, all such writings should be challenged. It is not simply that they are boring, dishonest and stupid. They are also damaging and dangerous.

Updated 23/02/22: the original version incorrectly referred to Duncan Smith as Smith. This has now been rectified.

Friday, 18 February 2022

Mugged by reality

In his last ‘Week in Brexitland’ post, the journalist Nick Tyrone suggests the political conversation about Brexit is shifting from the abstract to “whether the Brexit we’ve ended up with now is good or bad in the specific”. My sense is that this shift has been occurring for two or three months, mainly as a result of the rumblings of discontent from Thatcherite Brexiters which came to a crescendo with David Frost’s resignation, with their particular beef being the absence of the de-regulatory agenda they wanted from Brexit.

Boris Johnson’s creation of Jacob Rees-Mogg as Minister for Brexit Opportunities is clearly part of his response to it. Yet whilst Rees-Mogg has immediately assured the public that many “big wins” are already in the pipeline, he has also lifted attention away from the specifics of Brexit ‘as it is now’ by suggesting that “within a decade” the economy will be so transformed that no one will want to re-join the EU. This is similar to David Frost’s ‘test’ for the success of Brexit being that in ten years’ time “nobody is questioning Brexit. It was self-evidently the right thing to do”.

There’s clearly some way to go. “When are the commanding heights of Remain going to let it go?” wailed Telegraph Associate Editor Camilla Tominey last weekend (£). It was a strange article, associating any criticism of Liz Truss with pro-Russian remainery which is, to say the least, a novel analysis (she’d be far more likely to find apologism for Putin amongst certain Lexiters). But as to her question, the answer is likely to be never, or at least not until it has been demonstrated that Brexit is both not doing any harm and is doing some positive good, or at very least until the net balance of harm and good is clearly positive. In other words, not until specifics are delivered rather than abstract promises made.

When will they let it go?

And here Tominey has a problem, one shared by the rest of the right-wing commentariat impatient with Brexit, such as her Telegraph stable mate Daniel Hannan. For just as Hannan monotonously thunders that “Brexit is being squandered” (£) so too does Tominey lament that the government “simply hasn’t got Brexit done well enough”. So why should remainers be withdrawing opposition to, yet alone saluting the success of, Brexit when those who actually advocated it are so continually and so uniformly telling us it is failing? In fact, given that, a better question would be when will they let it go?

Equally, neither remainers nor sceptical leavers are likely to be won over when the claims made for specific Brexit benefits are so dishonest. Tominey identifies two. One is the usual lie about the vaccines programme, debunked many times before. The other, less familiar, one is the pioneering work being done on fusion power in the UK as host of … the Joint European Torus! Her point is that this shows that remainers were wrong to say that Brexit would end such scientific collaborations.

But this is a deeply twisted logic. First, some may have warned that all such collaborations would end and, indeed, had continuing involvement not been agreed that might have happened, as has been the case with the Erasmus scheme and the Galileo programme. Second, the more common warning was that such collaborations would become more difficult and more limited, and this has proved to be the case. And third, and most fundamentally, even taken at face value this isn’t a ‘benefit of Brexit’ as it would have happened without Brexit and is simply an avoidance of damage.

Even though it is only a passing line in a newspaper article, this is a fresh illustration of the observation I made a few weeks back of an emerging trend to justify Brexit in terms of it not having been as damaging as some warnings said it would be, often at the same time misrepresenting the nature of those warnings. More to the present point, it serves to show the hole the Brexiters are now in. Evidence of Brexit benefits is almost non-existent, and the only major claims they make for it are false. Evidence of the damage of Brexit stacks up almost daily, and they have virtually given up denying that damage. Deflecting from this by abstract claims about having regained sovereignty is not persuading the public and, crucially, is no longer satisfying the Brexiters themselves.

Getting specific means getting real

Hence the shift, now, to talking about specifics. But again the Brexiters are in a hole. Rees-Mogg talks in terms of specific gains, and of the positive impact on GDP – for now, once again, we are in the terrain of Brexit being presented as economically beneficial, rather than, as so often since the referendum they have pretended, being solely about the abstraction of ‘sovereignty’. Yet, whilst specific, these are still in the uncertain future. What about concrete gains, right now?

Here, the same old problems of the practical benefits of regulatory freedom recur. Take the new alcohol duties system, which Rishi Sunak trumpeted in the budget as only being possible because of Brexit. In this he was correct because it enabled him to levy duty based on the alcohol by volume (ABV) of a product. But this is devastating for the wine importing industry (£) because, unlike beer or spirits, the ABV of wine varies according to climate, and to the weather in a particular season.

Amongst other things this means that Australian wines, which tend to have high ABVs because of the climate, will attract much more duty and this will actually outweigh the benefit they get from the much-vaunted UK-Australia trade deal. It also means that UK wine importers will be having to constantly monitor the seasonal variations in ABVs. As with so many other features of Brexit, small firms will be especially hard hit, but all will experience an increase in ‘red tape’ which in turn feeds into inflation. “In this post-Brexit world where better regulation is a big sale, it would be hard to design a system more complex”, according to the CEO of the Wine Society.

Almost any sector of business or civil society yields a similar picture. Whilst generalist op-ed writers like Tominey and Hannan continue to promulgate airy ideas of regulatory reforms, their more specialist colleagues - including in the Telegraph – are alive to the gap between such ideas and practical realities. Thus in a response* to Rees-Mogg’s recent call for ideas to ‘slash EU red tape’ another of its Associate Editors, Ben Wright, wrote a closely-argued piece on financial services regulation (£). Delving into “arcane bit[s] of industry minutiae” which nevertheless have huge consequences, he concludes that “the idea that the City has been hogtied with EU red tape that can be slashed and thrown on the bonfire is, I’m afraid, simplistic to the point of sophistry”. (There are some emergent issues about changes to insurance companies solvency requirements which Wright touches on but I don’t have space to discuss today so will come back to in a future post.)

Wright goes on to warn of the dangers of what elsewhere I’ve called the ‘performative Brexit’ in the meaning of changing post-Brexit rules just because it is possible, even if it’s damaging – which is a good description of the alcohol duties situation. That can be avoided, as shown by the case of Intellectual Property Rights regulation, mentioned briefly in a recent post, where on examination of the practical detail the case for change was found wanting and abandoned.

Rees-Mogg to the rescue?

it’s exactly such practical scrutiny of the facts that needs to be brought to bear across the board, but whether a Brexit ideologue like Rees-Mogg is the man for that job is, to say the least, open to question. Certainly his outright denial this week that Brexit has damaged trade suggests not. Yet it’s not completely impossible, as shown by his apparent welcome of the ultra free-market Institute for Economic Affairs’ (IEA) proposal for the UK to continue to recognize the EU’s CE conformity assessment mark for an indefinite period, whilst continuing with the introduction of the postponed UKCA system albeit not with a view to it necessarily displacing the CE mark. In familiar IEA fashion the market would decide, in the form of consumer decisions, which mark became dominant.

As I’ve long argued on this blog the UKCA plan is utterly crazy and, although the IEA proposal doesn’t entirely scrap it, this is a fairly sensible idea (in practice, I suspect it would mean the UKCA mark withering on the vine). But, as the IEA report makes clear, it is part of a wider proposal that post-Brexit UK should unilaterally recognize EU standards and regulation, and potentially those of other territories, as a way of removing non-tariff barriers to trade (NTBs). To re-emphasise, this is not about ‘mutual recognition agreements’; it is about the UK unilaterally recognizing the regulations of others irrespective of whether the other party reciprocates.

If, as reported, Rees-Mogg is supportive of this entire approach – or even if it is only the specific CE proposal he supports – it marks a very significant departure from the ‘sovereignty at all costs’ mantra associated with David Frost and many Brexit Ultras. Within the longstanding contradiction between free-market globalism and nationalist and often protectionist localism that the Brexit project contains, it would be more than a tilt towards the former.

Moreover, Rees-Mogg’s unequivocal statement of support for the need to remove NTBs wherever possible might at least betoken recognition of one of the key issues Ben Wright identifies, namely the extent to which regulation is global, not even the product of the EU, and not something where the UK can usefully act independently. This applies as much to the car industry as it does to financial services, as was laid out quite starkly by the Brexit Select Committee in 2017 when it concluded: “there is no argument for a separate set of UK standards” (paragraph 27) … “we have not identified any potential benefits for regulatory divergence from the EU … There are only costs” (paragraph 30). Of course if Rees-Mogg is really so hostile to NTBs one might wonder why he is also so adamantly opposed to single market membership.

For the goods manufacturing sector generally, there is a further and very important political dimension to all this given the still very much live issue of the Northern Ireland Protocol. Not only is divergence from global and EU regulations likely to damage the competitiveness of British firms because it increases NTBs, it also serves to thicken the Irish Sea regulatory border. That is to say, the more that Great Britain diverges from the EU, the more Northern Ireland diverges from the UK. (This issue is only partially addressed by the IEA proposals in that whilst, as it says, unilateral recognition of EU standards would reduce or avoid checks on NI-GB goods movements, it would not make any difference to those from GB to NI).

Brave New World?

Given the existence of established global regulations in many sectors it’s often suggested that the real Brexit prize is in new, high-tech areas where the UK could lead in regulatory development and/or benefit from regulatory independence from the EU. That comes not just from Brexiters but sensible commentators such as the FT's Peter Foster, and as such should be given a serious hearing.

One of the most frequently mentioned examples, given by Foster and also by Rees-Mogg in his reference to ‘big wins’ in the pipeline, is gene editing of food crops and, indeed, new UK legislation in this area was announced last month, following a consultation exercise last year. This will be more flexible than EU regulation in that it will distinguish between gene editing and genetic modification allowing the former to be more readily exploited (at least in England; arrangements in Scotland and Wales will be different and, especially relevant to the point just made about border thickening because it will create a new phyto-sanitary divergence, Northern Ireland will continue to be bound by EU regulations).

Whether this is a good thing or not in terms of science, ethics or the environment I am not remotely qualified to assess. Certainly the consultation revealed significant opposition as well as support, but that is probably not unusual in any such process. Some key players, such as the John Innes Centre, which is a leading research institution for plant and microbial science, suggest that the changes don’t go far enough. It’s also worth noting that within the EU similar kinds of change are under consideration. So the Brexiters might be right to claim that the UK is able to move more quickly, and this is not necessarily a case where the UK is intending to move in a way which is irresponsibly lowering standards. Indeed countries including Argentina, Brazil, Japan and the US have in various ways moved in a similar direction. By the same token, even if a bit later, the UK might well have been able to make these changes without leaving the EU.

Whatever its other merits may be, this case raises several questions about post-Brexit regulatory ‘wins’. One is just about scale: could such flexibilities in new and niche industries compensate for the Brexit costs being entailed elsewhere, for example in the chemicals industry? I doubt it. Another is whether the UK’s regulations will act either as a magnet for firms in this sector to locate or invest? Possibly, but to what extent and for how long seems doubtful. And could it be the template for whatever may emerge as a dominant global regulatory structure (towards which there is already some movement) or, in the end, will the regulatory pull of the biggest players be more important than the speediness of the smaller ones? The latter is possible, and seems more likely to me.

Of course I don’t know if my tentative answers to these questions are correct, and the Parliamentary research briefing on the government’s plans, whilst highly informative in other ways, doesn’t offer any real help with them. But in due course they will become answerable in specific terms, not just flag-waving about independence. In the ‘Bioscience’ section (pp. 48-50) of the UK in a Changing Europe’s report on post-Brexit public policy, Dr Adrian Ely concludes that the gene editing regulatory change is “the first real test-case [for Brexit] in the bioscience sector. In its rush to diverge on this issue, the government is coming to understand the complexities of reconfiguring a tightly interwoven set of technical, legal, and institutional arrangements, and the political challenges of balancing public opinion, strategic industries, and different trade interests”.

Making Brexit work?

This gets to the key point about all of the ways in which Brexit is now moving from the abstract to the concrete, whether that be alcohol duties, conformity assessment marks, or regulations for intellectual property, financial services, car-making, gene editing or anything else. As it does so, it schools Brexiters in the realities they have for so long evaded. Although no doubt some will squeal to their dying day that they have been mugged by the ‘remain Establishment’, the truth is that they are going to be mugged by reality.

The other side of that coin is that even those most opposed to Brexit need not be so dogmatic as to believe that every single EU regulation that exists right now is the best possible regulation that could ever exist. So, whilst the jury is out for now, it may be that particular changes to gene editing regulation, and perhaps similar cases, will have desirable effects. If so, it’s possible to be supportive of them without taking them to justify Brexit. That can only be judged in the round, both in economic cost-benefit terms as well as those of culture and geo-politics. It’s quite possible to think that taken as a whole Brexit is a failure, and was always going to be a failure, whilst also recognizing that it needn’t have been done as damagingly as it has been and that, even now, there are still better and worse choices to be made.  

Within this context, the Labour Party’s still emergent stance on Brexit could begin to make sense. In remarks this week, Sir Keir Starmer said there was no case for re-joining the EU which, in terms of practical politics in both the UK and the EU at the moment, is true. Given this, it also makes sense for him to speak of making sure “we take advantage of the opportunities of Brexit” in a way similar to what I’ve just suggested. An obvious example, with much political traction, is Labour’s proposal to use the freedom to remove VAT from energy bills just as Brexiters promised would happen.

This doesn’t – or certainly needn’t – mean accepting Brexit in any sense other than recognizing the fact that the UK has left the EU. Nor does it mean that re-joining will never happen. Indeed, seeking a close and harmonious relationship with the EU is a necessary, but not sufficient, condition for that. But whether or not it ever happens it still makes sense to make what can be made of Brexit – after all, we still have to try to live as best we can – whilst waiting and working for the political weather to change.

That may happen all the more quickly the more relentless the focus is on concrete practicalities. The Brexiters’ comfort zone is the fatuous, dishonest and evidence-free claims and slogans – from ‘taking back control’ to ‘the will of the people’ – that have got us into this wretched mess, and which have made politics too toxic to deal with it. The more their own dissatisfaction with the results pushes them to make practicalities the established terrain of Brexit politics, the more difficult it will be to deny the existence of that mess or the most obvious solutions to it. In the end, reality always wins.


*It’s no longer clear Rees-Mogg is the right person to address remarks about financial service regulation. It is now reported that he will not make any decisions about this, because of the major conflict of interest that arises from his part-ownership of an investment firm.

Friday, 11 February 2022

The tangled web

“Oh what a tangled web we weave, when first we practise to deceive”  Sir Walter Scott

In an article this week the Guardian columnist Nesrine Malik neatly skewered the present political situation in the UK. Referring to Brexit amongst other things, she wrote that “an entire government has been built on fantasy and false promises” and made the crucial point “if your product is a con, you need a conman”.

It will be become more important, not less, to remember this if it turns out that we are seeing the end days of Boris Johnson’s premiership, for despite their close associations Brexit is not Johnson and Johnson isn’t Brexit. It’s true that Johnson has been complicit in creating the catastrophic mess that Brexit has become and told all manner of lies about it, as he has about so many other things. But the mess and the lies were inherent to Brexit. Brexit was the con, and Johnson wasn’t even the only conman.

It’s also important to understand what it means to say that the mess and lies were inherent to Brexit. The point is not simply that lies were told in pursuit of getting people to vote for it, or to defend the manner in which it was executed. That is true, but may not be so very different to other policies undertaken by many governments when, for example, statistics are manipulated in misleading ways or deceptive rhetoric is deployed. It might even be said that the remain campaign engaged in some of that. What’s different about Brexit is that it wasn’t just sold with lies, it actually consisted of lies.

This is the reason why it is not only justifiable but inevitable that, even as years go by, there continues to be outrage about what has been done, an outrage forcefully articulated by political commentator Jonathan Lis last week: “our withdrawal from the EU licensed a specific form of corruption: lying to people’s faces about things they could see before their eyes”. Continued outrage is justifiable because of the sheer scale of the offence, and it’s inevitable because now and for many years to come the consequences of the lies told are with us. More than that, the lies keep being re-told and added to – yes, by Johnson, but not just by Johnson: consider the numerous examples provided by Jacob Rees-Mogg in the remainder of this post. That is why it has proved impossible to ‘move on’ from Brexit.

The Northern Ireland Protocol lies

Nowhere is that more obvious than in relation to the Northern Ireland Protocol (NIP). The immediate crisis that developed last week when the DUP tried to halt Sanitary and Phyto-sanitary (SPS) checks on the GB-NI border has abated somewhat, because of the court ruling which temporarily blocked that attempt pending another hearing next month, but the situation Is far from resolved. Meanwhile, the UK-EU negotiations continue as, it’s worth recalling, they have in one form or another for over a year now, under first Michael Gove, then David Frost and now Liz Truss. So do the UK threats to invoke Article 16, which go back to January 2021, just days after the NIP became operational, and were repeated this week by Boris Johnson during Prime Minister’s Questions.

RTE’s Europe Editor Tony Connelly produced an excellent account of the background to last week’s events, and what runs through it is the UK government’s dishonesty about what it agreed to in the NIP and its dishonesty in not implementing it. All of this ultimately derives from the foundational dishonesty of the Brexiters that their project created no need of any border at all (something repeated by Rees-Mogg in Parliament this week). Then, along the way, there was dishonesty about the EU’s short-lived plan to suspend vaccine exports, about the unilateral suspension of grace periods, about what Article 16 means, and about many other things which I’ve summarized elsewhere. The latest dishonesty would seem to be that by unilaterally axing the agreed checks, the NIP can be got rid of, or substantially ignored, without recourse to the Article 16 process.

Lies piled on lies

To emphasise, the dynamic here is twofold: lies repeated and lies added. As a source quoted in Connelly’s report says of the current events “We’re basically back to the trilemma of 2017”. Yet things do change in the repetition and in the new additions for, as the source goes on, “except now it’s worse, because at that time there was more trust that the UK government was actually trying to do something in the interests of Northern Ireland. Now you're dealing with the people who screwed Northern Ireland over and over again, starting with the referendum, starting with Brexit".

One of the consequences of becoming so mired in lies is that it is almost impossible to change course. Like a mendacious child or a cheating spouse, once the first lie is told it leads to the second and the third and then to a doubling-down on the first. Perhaps, early on, there could be a moment to come clean and start afresh, but at some point that becomes impossible. You are living the lie. Perhaps, even, it no longer seems to be a lie any more, and the lie is living you. I think that something like this has happened to at least some Brexiters.

At all events, because the NIP has become so shot through with lies, it has become all but impossible to take the obvious step, which would solve many of the current disputes, of taking up the EU’s offer of an SPS alignment agreement which was made at least as early as July 2021. This would get rid of most of the checks to which the government and the DUP object, has the support of farmers and others including those in Northern Ireland, and at one time was actually advocated by Edwin Poots and the DUP (£).

The sovereignty lies

It's conceivable that Truss will now take, or try to take, this step. But here another feature of how Brexit consists of lies comes into play. Neither the NIP nor any other aspect of Brexit exists in isolation from others. Hence, along with the lies about the NIP, the barrier to SPS alignment is the many lies (or, at best, misunderstandings) about ‘sovereignty’. On this account, to agree to ‘dynamic alignment’ would be to concede sovereignty to the EU and, thus, be a betrayal of Brexit. Again there is a foundational lie, and then a series of additions or permutations.

The foundational lie is that EU membership entailed a loss of sovereignty, something discredited by, amongst other things, the very first Brexit White Paper in February 2017 which stated that “Parliament has remained sovereign throughout our membership of the EU” (paragraph 2.1). Then, like mould spores, the lies about sovereignty spread. It comes to mean that any role for the ECJ is a denial of sovereignty. It leads to false claims about how sovereignty enabled the early approval of vaccines (repeated by Rees-Mogg this week) and many of the other supposed benefits of Brexit. It takes strange and convoluted forms. In relation to SPS alignment these include that this would preclude a trade deal with the US when, apart from the fact that no such deal is in prospect, that implies that setting SPS regulations to suit the US would be fine but doing so to suit the EU would violate sovereignty.

The ’nothing should change’ lie

Even more bizarre is the idea – voiced by former Northern Ireland Secretary Theresa Villiers in an interview on Radio 4 last week (starts 40.55) - that the EU should just accept that UK products meet SPS standards because, as yet, our rules haven’t greatly diverged. This is a version of the much older, deeper, lie that current regulatory harmonization would yield an easy and comprehensive trade deal which would be virtually indistinguishable from trading as an EU member. That was the basis of Liam Fox’s “easiest deal in history” claim, which is rightly much-mocked but is rarely examined for the flaws in its underlying reasoning. Those flaws made it irrelevant in the context of the UK wanting to have the right to diverge, just as Villiers suggestion is irrelevant whilst the UK refuses dynamic alignment.

All this in turn is a version of the even deeper, most intangible, strangest and yet perhaps most pervasive of Brexit lies. That, somehow, the UK could have Brexit and yet not be treated like a third country and, from that, the lie that if the UK was treated as a third country it would be ‘punishment’. This was again in evidence in the Villiers interview when she bemoaned the EU treating the UK as it does other non-members, and in this way being unreasonable. It’s also the basis of the lie – also told by Villiers – that Brexit had no implications for the Irish border.

In this way, the sovereignty lies intersect not just with those about the NIP but with those about trade and regulation. In relation to trade, apart from the point just mentioned, the foundational lie was the repeated referendum claims that “there is a free trade zone that stretches from Iceland to the Russian border, and we will still be part of it”. Yet the only realistic meaning of this – that, like Iceland, the UK would be in the single market – was denounced as a betrayal of Brexit as it would not restore sovereignty (e.g. over freedom of movement of people, but over regulation more generally). From this, new lies flowed, such as Johnson’s false claim that his trade deal meant there would be no non-tariff barriers to UK-EU trade, and all the subsequent attempts to downplay damage to trade as ‘teething problems’.

The ‘red tape’ lies

On regulation, the sovereignty lies intersected with the lie that Brexit would get rid of bureaucratic red tape, when the opposite was always going to be the case and has been demonstrated in the last year, as shown in this week’s devastating report from the Public Accounts Committee. It leads, as discussed in last week’s post, to all the current attempts to create ‘independent’ regulatory systems, even though in general these lead to more ‘red tape’.

A new example this week is the suggestion that the UK could “capitalise on our regulatory freedoms” by not implementing new EU car safety regulations – regulations the UK contributed to developing whilst it was a member – even though they would reduce deaths and injuries. Like many of the other deregulatory proposals, it probably won’t happen as it is so patently foolish and because of the fissures within the Brexit coalition, although with Rees-Mogg now appointed Brexit Opportunities Minister (sic) who can say?

Notably, Rees-Mogg’s first act was to ask Sun readers to provide examples of ‘petty EU regulations’ they would like abolished. It was a tawdry piece of populism, ludicrously invoking Lord Kitchener, presumably intended to suggest that this is ‘the People’s Brexit’. Actually, Rees-Mogg is likely to find that ‘the people’ are in practice rather attached to regulation, especially where it stops them being killed. For it is increasingly obvious that the de-regulation (or, more often, as per last week’s post, re-regulation) enabled by Brexit is a solution in search of a problem, rather than a response to any actual problem. Supposedly, just because it would use ‘our Brexit freedoms’ it must be ‘a good thing’.

This reflects the absolutely central flaw in the sovereignty lie, which is that it treats national sovereignty as an abstract notion of unimpeded freedom rather than as a practical tool for doing things with freedom. That is why Brexiters are incapable of seeing that the choice to be a member of the EU doesn’t take away sovereignty but is one of the things a country can do with its sovereignty. Brexit is another such thing that can be done with sovereignty – but it doesn’t make us ‘more’ sovereign, it just means we exercise sovereignty in a different and less effective way. The issue is not, therefore, sovereignty in the abstract, as a ‘good thing’ whatever the consequences (as some Brexiters would now have us believe), but whether the uses made of it have good outcomes (which is the way that, by and large, Brexit was sold to leave voters).

Again, once the basic lies have been told and believed it lodges and then gives rise to new lies. An example this week is the proposal from the Global Britain Commission that the UK could have “a massive post-Brexit windfall” by increasing exports per capita to the same level as Germany. It seems to have escaped the Commission’s attention that Germany has achieved this level of exports without leaving the EU, and so the idea of it being a windfall of Brexit is a peculiar one. It’s just the same old lie about the value of having an ‘independent trade policy’, dressed up in the new – and stranger – clothes that Germany provides the comparator.

The promises betrayed

Whilst a lot of these lies were inherent to Brexit, and were never possible to deliver even in theory, other kinds of lie are about promises that might have been delivered in theory but in practice turned out have been false. The obvious example here is the claim that the centrality of parliamentary democracy would be re-asserted (made again this week in Rees-Mogg’s execrable Sun article).

In fact, we’ve seen the government having to be forced by the courts to hold the Article 50 vote and by backbench rebels to hold the Meaningful Votes, an illegal prorogation of parliament, and a massive grab of Executive power through the use of ‘Henry VIII powers’ which looks set to continue with the forthcoming “Brexit Freedoms Bill”. In a similar way, Brexit has seen erosion of the powers of the devolved institutions. Moreover, the promise that Brexit would mean more parliamentary scrutiny of trade deals and other international agreements than was afforded to the UK as an EU member has not transpired and seems unlikely to.

One reason why such promises have not been kept roots back to the way the Brexit process unfolded under Theresa May (showing, again, that Johnson isn’t the only cause of the present situation) and the wider public discourse which obtained at that time. For she and others consistently represented parliament as being subordinate to and subversive of “the will of the people”.

This morphed into the idea, which Johnson continued and developed, of the government as a pure distillation of the people’s will, and parliamentary democracy as its usurper, in direct contradiction to the earlier message about Brexit and parliament. In this, and many other ways, the lies and dishonesty of Brexit have morphed into the much wider ones of the culture war and of the entire political landscape. Brexit, as Lis observes, was the “original sin” from which the rest flowed.

The multi-Mobius serpo-viral Brexit gaslighting device TM

In the past, I’ve used the metaphor of the Mobius strip to capture the way that Brexit events keep recurring as the same old lies and fantasies keep encountering the same old realities. And that does capture some aspects, such as the constant return to the Irish border trilemma. No answer can be found because no answer exists, so the lies just keep taking us back to the same place. But, as suggested in this post, a better image would be a more complex one of numerous such strips, intertwined and writhing around like snakes, and reproducing and mutating like viruses.

True believers in Brexit may, as speculated earlier, have come to believe all the lies to be true. The even bigger problem is that many politicians who know they are lies, especially if they are in the Conservative or Labour parties, pretend not know this. Admittedly it’s not always easy to tell the difference. For example, does Dover MP Nathalie Elphicke really believe, as she said in Parliament this week in a version of the ‘nothing should change’ lie, that the now endemic lorry queues in her constituency are “not because of Brexit but because of Brussels bureaucracy”? Who knows, but there are certainly many MPs, probably including some of those who cheered her, who know such things are idiotic nonsense but don’t speak out.

That arises from fear of their own parliamentary and constituency parties, of the media and of sections of the electorate, but it is horribly dangerous and corrosive. Dangerous because it means that nothing truthful, and therefore nothing practical, can be done about Brexit. Corrosive because it has spawned a wider dishonesty, as argued forcefully by former Prime Minister Sir John Major in a speech yesterday. Johnson may be the most consummate liar, but his demise will not end that dishonesty.

That is why, referring again to Jonathan Lis’s recent article, we must not give up on talking about Brexit. He is surely right that “the Brexit specialists may be exhausted”. I can certainly relate to that. He’s also right that “everything there is to say on Brexit has been said many times”. I can relate to that, too. And the reason it is so is precisely because of the endless repetitions of old lies and the new ones they spawn. If we stop pointing them out, they easily become ignored or forgotten.

More than that, the weaving together of strands of lies in the way I’ve described here is what enables Brexiters to gaslight the general public. It just becomes totally exhausting and confusing to disentangle the long chain of events that lies behind, say, the ongoing NIP rows and crises. It can be easier, even for the well-intentioned and well-informed, to become disorientated to the extent of wondering if the Brexiters may have a point. However, even if that happens – no, especially if that happens – it doesn’t solve any of the problems all the lies have created, it just takes away any prospect of them being solved.

Of course there is a way to escape the tangled web of lies that Brexit and Brexiters have woven. It is for all those who know them to be lies to start telling the truth, and for all those who tell the lies to be exposed.


Many thanks to those who completed the survey at the end of last week’s post (now closed, though if you are part-way through completing it you will still be able to submit your response when ready). As a result, I can say that, certainly for now, I will not be migrating this blog to Substack or any other platform, and I will not be charging for access. For those interested, I’ve written a short discussion of the survey results.

Friday, 4 February 2022

What its second anniversary tells us about Brexit

Anniversaries matter, both in our personal lives and in the way that societies and nations define themselves. What we do and don’t celebrate or commemorate, and how, and what we feel about it are all part of collective identity and history.

Brexit is replete with anniversaries – of the referendum in 2016, of the triggering of Article 50 in 2017, of the end of the transition period in December 2020 and, most obviously, of the day the UK left the EU on 31 January 2020. The second anniversary of the latter fell this week.

One possibility would be to leave that day unmarked and unremarked. So far as I know, there was never any notice taken of the anniversaries of having joined the EU, nor of the 1975 referendum vote to stay in. Perhaps that is a sign that EU membership was never seen as being of much interest, or perhaps that it was insufficiently appreciated. In retrospect, had it been celebrated more we might not be in the situation we are now.

We 'got Brexit done'?

At all events, this week Boris Johnson and his Brexit-corrupted party, deeply immured in scandal and multiple crises, have been keen to spray (or should that be spaff?) around anniversary images of a beaming Prime Minister signing the Withdrawal Agreement with the brag ‘Got Brexit Done’. As ever, there is no care about the fact that half or more of the country sees this as nothing to rejoice about. Indeed about the only real pleasure Brexiters now seem to take in their project is the upset it has caused their compatriots. In this sense, to celebrate ‘getting Brexit done’ is also to wound, rather like inviting people you loathe to celebrate your birthday when it falls on the date that their child died.

Even in its own terms it is a claim that invites some obvious objections. One is that there are still several parts of Brexit which have yet to be implemented, most obviously the full UK import controls regime. Another is that almost since the moment he signed the agreement, Johnson has been trying, as he still is, to re-negotiate some of its core provisions as regards the Northern Ireland Protocol (NIP). Moreover, these provisions are the part of the agreement most directly associated with Johnson himself, since they are what he triumphantly negotiated as the way to ‘ditch Theresa May’s hated backstop’.

As if on cue, alongside the ongoing and fractious UK-EU negotiations, this week saw a serious new and still evolving crisis over the Protocol. Very likely I’ll write more about this in next week’s post but in essence it arises from the DUP’s attempt to unilaterally halt key parts of the NIP, specifically Sanitary and Phyto-sanitary checks on the GB-NI border. This has potentially major implications for the negotiations, for the UK-EU relationship generally, for UK-US relations and, of course, for the fragile politics of Northern Ireland.

It’s the latest consequence of the way that, having  totally refused to understand the implications of Brexit for Northern Ireland, Johnson and the Brexiters hastily cobbled together an agreement which they apparently neither understood nor intended to implement, and in the full knowledge that it was bitterly opposed by many unionists. That it should flare up again in this way and at this time underlines the hollowness and dishonesty of Johnson’s anniversary boast to have ‘got Brexit done’.

The ‘Benefits of Brexit’ report

The more substantive marking of the anniversary was the government’s publication of its lengthy report on the ‘The Benefits of Brexit. How the UK is taking advantage of leaving the EU’. I’ve already reviewed this in some detail for Byline Times and so won’t repeat that analysis here. In short, it’s a shoddy amalgam of false or misleading claims about things which Brexit has enabled Britain to do, vague and unrealistic aspirations, and heavy dollops of irrelevant waffle. David Smith, Economics Editor of The Sunday Times, reached a similar conclusion, describing it as “desperately thin gruel, a mixture of aspirations so far undelivered and things we could perfectly well have done while remaining members of the EU”. Even those supportive of its general ‘direction of travel’ have had to admit that it lacks convincing detail.

As with the ‘Got Brexit Done’ slogan, the report shows how the case for Brexit is still having to be made and that the process of Brexit is very far from over. I mention in my review that the political purpose of the document is partly to generate a few good headlines in the pro-Brexit press, and partly a response to the growing discontent from Brexiter MPs and commentators, and perhaps most notably from David Frost (£). For quite some time now they have been asking, in particular, to see the de-regulatory agenda that so many of them associate with Brexit.

In a way, they have a point. It’s remarkable how much of the document shows how little progress the government has made, so that a great deal of it is about reviews and consultations which will be held in the future. After all, it’s now eight months since the Iain Duncan Smith TIGRR report that was supposed to set the agenda for all this, and only slightly less since the creation of the Brexit Opportunities Unit was announced.

What this reflects is that, when it comes to practical realities, the opportunities for regulatory change are quite limited and also horrendously complex*. It is therefore much easier to contemplate and discuss than to act. This of course was entirely obvious to anyone with any understanding of business, law or public policy from the outset, for reasons I’ve discussed many times on this blog. But since it is impossible, now, for the government to respond to the question ‘what is Brexit for?’ by saying ‘nothing, it’s a total waste of time’, it’s necessary to keep holding out the promise of great reforms.

Two varieties of ‘performative Brexit’

At a deeper level, this shows how Brexit continues to operate as a set of campaign promises rather than as a programme of government. Thus the report might be taken as another example of ‘performative Brexit’, giving an impression of great activity without actually doing anything. If so, this is still damaging because it means that the government isn’t focussing on the many pressing things it can and should be doing.

In any case, it’s unclear that this situation can satisfy the Brexiters for long since eventually even the dullest of them – admittedly a crown with many pretenders - will presumably realise that nothing much is happening. Joe Marshall of the Institute of Government, whose assessment of the report is very similar to mine and to David Smith’s, remarks that it “may briefly lift the spirits of Conservative MPs”, and it has proved to be very brief. For within hours of its publication it was reported (£) that some of them, including ERG stalwart David Jones, were attacking the report for “watering down” deregulatory plans, especially the ‘one in, one out’ rule on regulations, in favour of meeting net-zero carbon targets.

Certainly arch-Brexiter Daniel Hannan isn’t happy with the report, correctly identifying not just its aspirational vagueness but also that it does not really articulate what scorched earth economic liberals would call a de-regulatory agenda at all, something also recognized by Annabel Denham of Institute of Economic Affairs, who is very much from that ideological stable. In a similar vein and from a similar position, Sunday Telegraph Editor Allister Heath thinks (£) Johnson is delivering a “Remainers’ Brexit” which, with the usual tropes of Brexiter victimhood and paranoia, is a “betrayal” (£). Never do they pause to consider that the reason their fantasies are undelivered is because they are undeliverable.

Hannan – who, like Heath, has no real understanding of either public policy delivery or running a business – ascribes this to the civil service ‘blob’ and businesses attached to the status quo. Again it’s the familiar Brexiter lament that there is some wonderful Brexit which ‘the Establishment’ has thwarted. In fact what seems to have happened was that Whitehall departments were asked to submit lists of things that the UK could now do independently of the EU. At the same time, civil servants will have understood that the scorched earth deregulatory approach is totally unworkable and, by the way, not voted for, or even voted on, in either the referendum or the last election. The outcome is what is in effect a re-regulatory agenda.

The real danger of this is that the performative Brexit of promising future reforms but doing nothing will give way to a different kind of performative Brexit where, as with trade policy (and, as suggested in my last post, foreign policy), widescale re-regulatory reforms actually begin to be enacted on the basis that an ‘independent’ system of regulation is a good thing in and of itself, even if in practice it results in costly duplications for exporters and significant new barriers to importers (nor is the issue just trade – the same dynamic holds for all kinds of international cooperation or competition that take place within regulatory frameworks)**.

A never-ending campaign

The sense that Brexit continues to be a campaign is also reflected in the way that this second anniversary has been marked not so much by celebration as by assessing and questioning, with surveys and reviews of survey trends such as that provided by Professor Sir John Curtice this week. His analysis shows, amongst other things, both a significant continuing division of opinion (52-48% in favour of being in/out) but also a steady shift amongst both remain voters (27%, up 10% over the year) and leave voters (26%, up 12% over the year) towards the view that Brexit has gone worse than expected. Of course what these voters mean by the latter may vary wildly.

The overall conclusion Curtice draws from these and the other poll findings he discusses is that any idea that Brexit is no longer a divisive issue “is far from the truth”. It is also the case, as Professor Anand Menon’s anniversary analysis concludes, that the political effects of Brexit are unpredictable. In this way, as with the questions posed by the ‘got Brexit done’ line and the government’s Brexit benefits report, what we can see at this anniversary point is a sense that Brexit is still an open and ongoing debate, as if there were indeed still a campaign underway.

That is also evident in a very different anniversary piece, by the Lexiter Economics Editor of the Guardian Larry Elliott. His approach is to ridicule the ‘Project Fear’ warnings of some in the literal campaign of 2016 so as to argue that the effects of Brexit over the last two years have not, after all, been “calamitous”. It’s a strange kind of defence, albeit an increasingly common one from Brexiters of all hues, resting not on Brexit having done any good but on it not having had as bad effects as some claimed it would. Yet Brexit was hardly sold to voters on so modest a basis.

It’s true that Elliott ends with the proposition that there could now be “a Labour Brexit in which the state uses its new powers to build a greener, fairer, levelled-up Britain” (a vision which sounds surprisingly like Johnson’s rhetoric, though I do realise that Elliott’s substantive aspirations are genuinely radical). But it’s not clear why leaving the EU was necessary to achieve this. And, crucially, as with the government’s Brexit benefits report, it remains at the level of campaign-like promises of what Brexit could be.

In fact, in a sense, the positions of Lexiters like Elliott and hardcore Thatcherites like Hannan are identical. One sees Brexit as a gateway to a socialist utopia, the other as a route to neo-liberal nirvana – neither of which has any conspicuous appeal to the majority of the electorate or to their parties’ leadership, and both of which massively over-estimate what being out of the EU actually enables. At the same time, their co-existence is part of the fundamental problem that has plagued Brexit all along, and which at this anniversary still persists: it was supported for multiple reasons, which can’t all be satisfied by any actual delivery.

The consequences of this are now being played out. People like Hannan and Heath are realising that ‘independent regulation’ doesn’t automatically mean ‘de-regulation’ - as, too, are those remainers who assumed that de-regulation was ‘the real agenda’ behind Brexit. For there was no single, real, agenda. Much of the nationalist and nativist support for Brexit is hostile to free markets and deregulation, just as its globalist and free-market supporters are hostile to the kind of activist state and protectionism that Lexiters favour. If ‘leave means leave’ was the glue that very temporarily held all this together, what is now ever-clearer is that it doesn’t lead to the suspension of politics, any more than it suspends the realities of geography or economics.

Why does any of this matter?

Last year, David Frost said that “while a proportion of the [British] public may regret Brexit … overwhelmingly we are now looking forward” and, on another occasion, that a test of its success in ten years’ time would be if “nobody is questioning Brexit. It was self-evidently the right thing to do.” It’s clear from the survey evidence that the former statement downplays the scale and the strength of that regret. As for the second, it's still early days but given how things look nearly six years after the referendum I think it is highly unlikely that by 2031 Frost’s definition of success will have been met, not least amongst Brexiters themselves on the present showing.

That is a serious problem for the most committed Brexiters since they claim leaving the EU to have been a national liberation, which is hardly compatible with most of the country thinking it to have been a huge mistake. Nor is it compatible with having been done against the majority vote in Scotland and Northern Ireland, with all the further national division that has brought.

For this reason, the second anniversary of Brexit has not been marked by a national celebration, or even a national commemoration. In every aspect it takes the form of an ongoing conflict, in that there continues to be a campaign-like contestation over whether it is desirable, where it is going, where it should be going, and - most fundamentally of all - what Brexit actually means. So if, as I suggested at the beginning, anniversaries disclose something about collective identity and history, this one tells us, firstly, that Brexit has fractured collective identity and, second, that it is not history but an ongoing political conflict.

One of the more minor but most striking pieces of Brexit news this week was that an MP visiting the now semi-permanent lorry queues at Dover, where stranded drivers have no toilet facilities, trod in a heap of human excrement. Some may be tempted to see this as the perfect metaphor for Brexit. Actually, a better one would be a group of people arguing for years about whether it was really human excrement, whether the MP really trod in it, whether it was a good or bad thing that he did, whether it didn’t matter so long as it was British excrement, whether it didn’t matter so long as it wasn’t British excrement, that although unfortunate it was only a teething problem and all will be well in future, whilst others simply retch in disgust. In this metaphorical – and scatological - scenario I, presumably, would be writing a blog post about the whole sorry spectacle. As, in fact, I am.


*To take a very specific example, consider the outcome of the suggestion in the TIGRR report to explore changing rules on the exhaustion of Intellectual Property Rights. Following a consultation, it has now been decided to retain the temporary post-Brexit arrangements (despite their being in some respects problematic) as the alternatives are worse and far too complicated to implement. It is an illustration of the gap between airy aspirations from generalists and highly technical and complex realities. I suspect a similar outcome may emerge from many of the specific reviews and consultations proposed in the Benefits of Brexit report.

**It’s important to recognize that the extent of potential re-regulatory change associated with Brexit is huge, so whilst some general points can be made about it there are significant sectoral specificities. See, for some example, discussion of the Benefits of Brexit report in relation to environmental regulation by Dr Viviane Gravey of Queen’s University Belfast or space by Dr Bleddyn Bowen of Leicester University. No doubt there are, or will be, others. Again, this relates to the point that it’s not until the complex technical realities are engaged with that the prognostications of Brexiter fanatics and de-regulatory ideologues can be evaluated and, typically, be found wanting.