Friday, 28 October 2022

Enter Sunak, the fifth Brexit Prime Minister

So the brief interruption to his seemingly permanent holidays from the MP’s job he is paid for was all for nothing in the end, as Boris Johnson’s bid to return to the leadership failed. It was yet another testimony to his egotism and entitlement and even in making it added to the long list of damage he has done to the country, this time by making Britain’s political crisis an even greater source of international disrepute than it would otherwise have been. “A country in free fall” as an Austrian paper put it last Sunday.

Little will Johnson care about that, any more than do the media organizations that breathlessly hyped his every word and movement last weekend as if he were the Prince returning from over the water to free his people, rather than a disgraced grifter coming back from the seaside to stick his snout into the trough again. He may yet be back for another go, but his first complacent and then demeaning conduct this time may have made that less likely. If so, it is one blessing. Meanwhile, Liz Truss stomped off with a defiant final speech, suggesting she still doesn’t even begin to understand why it all went so wrong, so quickly, for her.

Had Johnson succeeded, the prospects of immediate political crisis and further economic damage would have been much greater than they are: tellingly, sterling rose and gilt yields (i.e. the cost of government borrowing) fell sharply on the news that Johnson had decided not to enter the contest. That continued as Rishi Sunak began to form his cabinet. He is also likely to enjoy at least as brief period of respite from internal attacks from his MPs, and perhaps a bounce in the opinion polls, although there is very little sign of that yet.

However, as the fifth Prime Minister since the Brexit referendum (and the third in the last seven weeks) takes office, continuing political crisis is assured for the reasons I discussed in last week’s post and several others over the summer. It may not quite be “inevitable that Sunak will be politically ripped apart by the same contradictions that plagued his predecessors”, as Nick Tyrone puts it in his latest Week in Brexitland newsletter, but it’s certainly highly likely, and what is inevitable is that Brexit will play a central role in his administration and its ultimate fate.

Sunak, Brexitism and Brexit

Sunak may well be more ‘realistic’ and more ‘competent’ than either Johnson or Truss, and, low as the bar is, he can hardly fail to be more ethical than the former or less maladroit than the latter. He may also, as Timothy Garton Ash and many others believe, be less prone to ‘Brexitism’ than either of them, with one index of that being his good relations with the civil service (£), in sharp contrast to his predecessors and most of the Brexit Ultras. Nor does he seem especially interested in fighting the Brexitist anti-woke, culture war, although some silly digs during his first PMQs about ‘North London’ and Labour’s supposed attempts to reverse the Brexit referendum suggested he’s not completely immune to it. He also seems fairly free of the vapid boosterism of the two previous incumbents and of their ‘magical thinking’ that true Brexit belief can trump reality. And he made an early, and apparently well-received, phone call to Ursula von der Leyen.

However, ultimately he won’t be exempt from the charge of Brexitism unless he is honest about the damage of Brexit itself, as suggested in a robust intervention this week from long-time Tory donor Guy Hands, and addresses how to reduce or even reverse it. As the leading businessman Juergen Maier also argued this week, that means seeking to rejoin the single market and a customs union. The economic logic is impeccable, especially for a country in desperate need of growth. The costs of being outside are high whilst the benefits are small, if not non-existent. On the customs union, in particular, trade expert Sam Lowe makes it clear that the UK’s ‘independent trade policy’ has faltered having hardly begun. And Maier’s proposal would also effectively solve the Northern Ireland Protocol issue.

The politics are an entirely different matter though. As Maier points out, his proposal involves a “brave shift” to face down the ERG in the way that no Tory leader since, to an extent, John Major has done. It’s true that if Sunak were going to do that then now is the time, since the Tories can hardly depose yet another leader, and he could threaten them with a General Election. But I suspect, and I expect Sunak does too, that there are sufficient ‘Spartans’ who are simply beyond caring about the consequences, and would prefer to crash the government and the Tory Party than accept a reversion to ‘soft Brexit’ (or even some milder easements of Brexit’s effects).

No doubt there will continue to be calls to do so, and Tory MP Tobias Ellwood has been making them for some time now, but it’s all but unthinkable that Sunak will heed them. Even so, in the past, unlike most Brexiters, Sunak has actually admitted to some of the damage to trade. And although in his first ‘address to the nation’ he briefly mentioned ‘embracing the opportunities of Brexit’ he said no more. Arguably, he could hardly have said less. Perhaps the very most that can be expected is that he might stop adding to the damage, for example through pointless and costly regulatory divergence.

The post-Brexit political constraints on Sunak

Of course if Sunak went even that far it would add to the roster of political opposition he faces within his own party. Even before his victory had been announced there were signs of it, with Christopher ‘upskirt’ Chope, conceivably the most odious MP not just of this Parliament but those of many decades, warning that he faced an “ungovernable party”. The reason, at least in the first instance, is that, like rainmakers forecasting the weather, MPs such as Chope will make it so. Indeed there is a sense that, quite apart from any disputes about personality, policy or ideology, there are some Tory MPs now addicted to the drama and chaos of rebellion, plots and coups. Within that, some, most obviously the ludicrous Mark Francois, appear to revel in the pompous self-importance that such drama allows, like a latter-day Captain Mainwaring but with less good scriptwriters.

However, the opposition Sunak will face goes much deeper than that, and the reasons all root back to Brexit. One is the fragile nature of the electoral coalition that delivered Johnson the 2019 ‘get Brexit done’ General Election majority which Sunak inherits, a fragility which feeds through into a highly factionalised body of Tory MPs. Now, those voters, and especially the fabled Red Wall voters, are leaching away from the Conservatives whilst the factions are more entrenched than ever. It is not the case that, just because Johnson assembled this coalition, he and only he could manage the factions it gave rise to. In fact, despite being, on paper, a comfortable majority, right from the outset of the 2019 parliament Johnson faced repeated actual or threatened rebellions, resulting in numerous policy U-turns. So Sunak will have a majority which is large, but is inherently unstable, with many factions able to mobilise the 40-odd votes needed to defeat any particular piece of legislation.

That instability will be all the greater for Sunak because the consequence of Truss’s disastrous mini-budget is to make significant public spending cuts his first priority, whereas part of Johnson’s 2019 pitch was to airily banish ‘austerity’ to the past. It remains to be seen whether the Red Wall MPs, especially, will condone its return. Equally, others will oppose any tax rises he may introduce. It’s even possible Sunak’s government may fall early on, if it cannot pass its finance measures, but that’s the one thing that may force rebel MPs to approve them: the potential rebels on fiscal policy, unlike ‘the Spartans’ on anything Brexit-related, are not immune to reason.

The other reason he will face opposition goes deeper still, and derives from the incoherent and now fissured support for Brexit itself. In particular, although Sunak was himself a Brexiter in 2016, albeit not a very high-profile one, for many of those who were high-profile he is the ‘wrong sort’ of Brexiter. Indeed that is the inevitable corollary of him being less ‘Brexitist’ than the last two Prime Ministers. Thus, already, his premiership, and the demise of Truss, are being represented by Nigel Farage and others on the populist right as being a victory for the ‘globalist Establishment’ and a ‘remainer coup’. Likewise, he is seen as having been too ‘conciliatory’ to the EU when he was Chancellor, especially as regards the Northern Ireland Protocol. Notably, his candidature was not endorsed by the ERG which, despite its pledge of loyalty to whoever became the leader, looks set to pounce on any deviation from what it takes to be Brexit orthodoxy. Yet at the same time as being denounced as an Establishment ‘globalist’, and despite being very much on the free market, deregulatory right, in the bizarre world of Brexiter politics Sunak is regarded as a ‘socialist’.

Everything about this is difficult to decode, since it comes from supporters of Johnson, who was neither a deeply committed Brexiter nor a small-stater, as well as from supporters of Truss and the Patrick Minford-IEA libertarians, from whom Sunak is not very ideological distant except to the extent that he didn’t endorse their ‘anti-Establishment’ idea that borrowing money to cut taxes would promote growth. Indeed he is likely to be closer to Truss’s version of Brexit with respect to being relaxed about immigration levels than to that of Suella Braverman, and this cuts directly across the Farage line that Truss et al were anti-Establishment insurgents and yet not genuine Brexiters on immigration in the way Braverman is. It’s yet another example of the total incoherence of the Brexit project.

Sunak and deregulation

That incoherence also wrongfoots some critics of Brexit, so that the fact that the Trussonomics libertarians despise Sunak and vice versa rather confounds those who, when he was Chancellor, insisted that he was in the vanguard of an extreme libertarian plan whereby Brexit would pave the way to the creation of ‘Charter Cities’ across the UK. Although that idea was always nonsense, it remains the case that Sunak is ideologically committed to deregulation, and that means that it would be wrong to assume that that part of Truss’s post-Brexit agenda has disappeared. In fact, she never even got round to unveiling the ‘supply-side reforms’ that were to be the counterpart of the tax cuts as part of the plan for growth. Sunak may very well do so, even though the tax-cutting part of the plan is dead, as is the idea of ripping up employment rights, which even Truss realised was too extreme (£).

However, as I’ve written about in detail before, those deregulatory reforms are also likely to encounter significant opposition from some groups of Tory MPs, especially as regards planning laws, whilst the ‘bonfire of EU regulations’ to be created by the EU Retained Law Bill will run into major practical problems and has already encountered opposition from business and other lobby groups. This legislation was initially sponsored by Jacob Rees-Mogg until his resignation – which itself provided another instance of his trademark pretentiousness, dated as it was ‘St Crispin’s Day’. It was a suitable end to a Ministerial career which he would never have had but for Brexit, and should never have had – not because of his Brexit views but because his Pooterish didacticism marked him out as the worst kind of middle-management drone, more concerned with exerting petty authority than providing effective leadership.

The Bill continued its passage this week, with Rees-Mogg now on the backbenches spitefully denouncing as anti-Brexit those Tories raising concerns about it. Yet already it is reported that Sunak is considering slowing or even abandoning this legislation, and also that it runs counter to what he promised the ERG. So this a very possible flashpoint for a Brexit-related rebellion.

Another Brexit fissure was re-opened by Sunak’s controversial re-appointment of the politically and morally grotesque Suella Braverman to the Home Office, itself apparently the price of getting her endorsement, as a high-profile ERG Brexiter, of his candidature rather than Johnson’s. This appointment can be seen as his ‘first mistake’ but is really just the first consequence of the necessity for Tory leaders to try to placate the unplacatable ERG. In turn, it will have the consequence either that relaxation of immigration controls to promote growth is off the agenda, or that there’s going to be a reprise of the almighty Truss-Braverman row about it (£) and a wider row with other anti-immigration Brexiters. Another possible flashpoint.

It’s not even clear whether the Sunak government will be able to afford the tax breaks (£) to make meaningful the plans for Investment Zones, assuming he continues with that proposal from the Truss-Kwarteng period. What is clear, from an answer he gave Green MP Caroline Lucas at PMQs on Wednesday, is that he will not continue Truss’s attempt to revive fracking, which had already prompted bitter division amongst Tory MPs.

At all events, despite being elected unopposed by a party under ‘existential threat’ if its dysfunctionality continues, Sunak’s political position is not strong. Indeed, amongst party members, who rejected him as leader during the summer leadership contest, and would prefer to still be led by Boris Johnson, it is decidedly weak. So too is it weak in the country generally, presented with yet another mid-term change of Prime Minister without a general election, raising questions about the legitimacy of his mandate. There may be little they can do, at least directly, but the various factions amongst the MPs certainly can, and there must be every chance that a vengeful Johnson will take every chance to stir the pot. So whether on spending cuts, deregulatory reforms, EU retained law or immigration he may well face significant opposition.

Northern Ireland Protocol: the first crisis for Sunak?

However, it could be the Northern Ireland Protocol (NIP) which creates the first real crisis for his premiership. The dynamics of the NIP situation have actually changed remarkably little since I wrote about them in detail in July, when Johnson was still Prime Minister and the NIP Bill was starting its passage through parliament, which is continuing now. If things are different to how they were then, one reason is just because the passage of time has brought the non-functioning of the Northern Ireland power-sharing institutions to a point of urgency, with fresh Assembly elections now in prospect as of today.

The situation has also changed as regards negotiations with the EU because Truss proved to take a relatively conciliatory approach, and seemed to have managed to get the two ERG hardliners she appointed as NI Secretary and Minister – Chris Heaton-Harris and Steve Baker – on board with that approach. We will never know how that would have developed had she continued in office, and it remains to be seen what happens under Sunak. It is certainly important that he has kept Heaton-Harris and Baker in their posts, but what that importance is remains unclear, as it did under Truss. Does it betoken a refusal to make any compromises with the EU, as their hardliner credentials might imply? Or is it that those credentials are to be used to ‘sell’ a compromise deal to the Brexiters including, conceivably, the DUP?

For the fundamental question for Sunak, as it was for Johnson and Truss, persists: if he does any deal that the EU is remotely likely to accept, will the Brexiters also accept it? Despite Baker’s surprising and potentially game-changing recent apology over how the Brexit process as regards Ireland and Northern Ireland had been handled, last weekend he issued an uncompromising warning to Sunak that the ERG would not accept any role for EU law in Northern Ireland and would collapse the government rather than do so. Yet it seems inconceivable that the EU would, or even could, agree to such an arrangement.

So either there will be no deal, the NIP Bill will pass and be used, causing a crisis in relations with the EU, and with serious implications for relations with the US; or a deal will be done with the EU, the NIP Bill abandoned or its powers not used, and there will be a political crisis within the Tory Party. Moreover, both have economic consequences. A crisis with the EU could ultimately lead to trade sanctions or even a trade war. A fresh political crisis will indicate further instability which impacts on the price at which markets are willing to fund government debt. Plainly either will be damaging to Sunak’s core focus of restoring international credibility and financial stability.

The unfolding legacy of Brexit lies

The NIP situation is the most high-profile reminder that, along with any other problems the government and the country face, those of Brexit persist. Some of these are the now entrenched ones, like the higher costs of trade and disruption to holidays in the EU. Others, like the NIP, are issues still unresolved from the exit process, and reflect both the lies told during the referendum campaign and the dishonesty and incompetence of the agreement made by Boris Johnson and David Frost.

There are numerous examples of the latter sort. One, which has received remarkably little attention, can be seen to symbolise all of them: the UK’s continuing failure to impose post-Brexit import controls. I’ve written in detail before about why this matters, especially as regards animal and public health, primarily because the UK no longer has full access to all the relevant EU databases, but also due to lack of staff with the necessary skills, as highlighted by a recent report from the Public Accounts Committee. The consequences of that were revealed this week when, within a 24 hour period, 21 out of 22 lorries inspected coming in to Dover from the EU were found to be carrying illegal raw meat products.

The reason this example is symbolic is because, like the NIP, it shows the ongoing consequences of the lies and incompetence of the Brexiters since 2016. Repeatedly they denied that (hard) Brexit entailed borders. Repeatedly they declared versions of ‘if the EU want to erect borders, that’s up to them’, demonstrating a total failure to understand the consequences of what they were advocating, not just for Northern Ireland but for all borders with the EU. That in turn meant that preparations were not begun until far too late, and the chance to extend the Transition Period to give more time to prepare was rejected as ‘backsliding’ on Brexit. So here we are now, in 2022, with a whole swathe of persistent, unresolved, ongoing problems, ranging from fishing quotas, to agricultural subsidies, to participation in Horizon, to the introduction or otherwise of the UKCA mark, to, indeed, the introduction of full import controls.

It is important to emphasise this because, as time goes by, it becomes easy to treat Brexit as if it were a past event, at most something with consequences we must now live with. Or to see the NIP issue as the last hanging thread of the Brexit process. But that is not the situation at all. Rather, in all sorts of ways, we are still in the process of ‘doing’ Brexit even though, apart from, sometimes, Northern Ireland, that is no longer headline news. And, in that process, we are still uncovering the criminal irresponsibility of the ways the Brexiters lied.

It will be especially easy to forget this given that the immediate political focus of the Sunak government will be the economic crisis, with the full fiscal statement now scheduled for 17 November. That would be wrong because all these ongoing Brexit problems are also important. But it would be doubly wrong since Brexit is embedded at the centre of the economic crisis itself. Inflation is higher, the trade deficit is larger, the labour shortage is greater and growth is lower than they would have been but for Brexit. To the outside world it is so obvious. As leading French journalist Sylvie Kauffman, writing in the Financial Times (£), puts it “for many Europeans, the only surprise of the British political and economic mayhem of the last few weeks is the lack of debate about its real cause: no one involved seems to blame Brexit”.

TL;DR

For all that Sunak may be hailed as a ‘serious’ and ‘realistic’ Prime Minister, the fact that he cannot admit these obvious facts about Brexit without being destroyed by his own party means that he cannot seriously or realistically address the economic crisis. As I argued at length in last week’s post, the same goes for Starmer unless he does so. And for all that, as also discussed in that post, the ignominious collapse of Truss’s government may mark a turning point in the entire Brexit saga, the corner has not been turned by the arrival of Sunak. Nor will it be until the poison of Brexit lies has been drained from the body politic.

Friday, 21 October 2022

Total disarray

It’s becoming hard to write this blog without being repetitious and, in being repetitious, introducing a distasteful ‘I told you so’ tone. But distasteful as it may be, the deepening chaos of the fortnight since I last posted, which saw Kwasi Kwarteng sacked, the government’s economic policy abandoned, Suella Braverman resign, and culminated in the resignation yesterday of Liz Truss herself, only underlines the comment I made in August. At that time, with Truss’s leadership victory expected but not yet announced, I wrote that: 

“When this strange summer ends, it will not herald the end of the period of political instability any more than the events and crises of the summer are peculiar to the season. This isn’t a holiday that has gone horribly wrong, it’s the latest instalment of a reality there is no taking a break from. That political instability began with the 2016 referendum. Having a new Prime Minister is not going to finish, but is a part of, this post-2016 story”. 

That’s not, however, to pretend that I predicted just how quickly things would unravel, to the extent that in my most recent post, following the ‘mini-budget’, I was writing that the wheels had come off the Brexit bus. It’s that last point that needs to be emphasised as forcefully as possible, in order to understand both the crisis happening now and the fact that the instability will continue when Truss is replaced next week. This is not just any old political and economic crisis, and it is not just the political and economic crisis of an unusually inept and extreme Prime Minister. It is centrally and unavoidably the latest instalment of the rolling political and economic crisis that started with the referendum.

This isn’t just a crisis, it’s a Brexit crisis

It's a point made with great clarity by Guardian columnist Jonathan Freedland, who wrote that “when the textbooks of the future come to the chapter we are living through, in the autumn of 2022, they will start with the summer of 2016: Brexit and the specific delusion that drove it”, and concluded (this was a week before she actually resigned) that Truss “is finished, a hollow husk of a prime minister. But this is bigger than that. The Brexit bubble has burst”. In a similar vein, writing in The Atlantic, Helen Lewis argued that Truss “has failed because she is a born-again Brexiter, and had already swallowed the lie that reality can be bent to ideology”. Nor is it just British commentators who can see it. “The roots of Truss’s budgetary bedlam lie deep in the soil of Brexit”, said Ireland’s former Ambassador to the UK, Bobby McDonagh, in the Irish Times and it is a view very widely shared in the foreign press.

It won’t fly for Brexiters such as Sherelle Jacobs of the Telegraph (£), to denounce as “bunkum” put about by “diehard proponents of Project Fear” the analysis that Truss’s “foolhardy mistakes trace back to the hubris that Brexit unleashed”. For, on the one hand, her fellow-columnist Jeremy Warner opines (£) that current events show that “Project Fear was right all along” whilst, on the other, Allister Heath, Editor of the Sunday version of her paper, urged Truss to “hold her nerve” (£) in pursuit of those very mistakes so as “to deliver a Brexit that actually works” (£) and, bizarrely, John Longworth insists that Truss was brought down by “anti-Brexiteers” (£) as part of their ongoing attempt to derail the Brexit ‘revolution’. Either way, then, Brexit and the mini-budget that ended Truss’s premiership are inseparable.

So, too, are they inseparable in the mind of another Telegraph columnist (£), Ross Clark, but in a different way. In his view Britain has “blown Brexit” by failing “to create a more dynamic, opportunity economy”. However, Truss and Kwarteng had “correctly diagnosed” the problems and their mistake was “unleashing a massive welfare programme” (meaning the energy support package, the one part of the mini-budget that markets were not concerned about), whilst Braverman’s frenzied preoccupation with immigration was misplaced as the real danger is a brain drain from the failed experiment of Brexit.

It must be strange indeed to inhabit the increasingly unhinged world of the Brexiters’ house journal. Another of its columnists, Tim Stanley (£), seems to think that the financial markets have exacted the “revenge of the remainers”, with Truss the “victim of a coup”, and that “hitherto the argument against Brexit was emotional, but watch as it becomes technocratic” with “the grey men” saying it is “unaffordable”. It’s a bizarre about-turn, given that for years we have been told that the genius of the leave campaign was to appeal to emotions, and that remainers have always been dull technocrats, preoccupied with affordability.

Equally contradictory is the way that, whilst Stanley and others are weeping about the Establishment victimizing poor little Truss, the paper also reports (£) that Nigel Farage and those on the right of the Tory Party have been fulminating that the real problem was with Truss herself for being in the process of betraying Brexit, and Braverman’s resignation letter, in its comments about failure to honour commitments to reduce net migration, gestures to the same critique, itself a derivative of the disjuncture between different threads of the Brexit coalition and their different priorities.

Counting the cost of Brexit’s fatal flaw

There’s not much point in trying to make sense of all this for the very good reason that none of it makes any sense, certainly not in combination. It is the last gasp nonsense of people who know their Brexit project has failed and are flailing around to make sense of why, and to decide who to blame (they, themselves, being invariably exempted). Perhaps the most striking example, trivial in itself and yet, somehow, also highly revealing, is a comment from Tim Stanley, not in his column but in a tweet. Bemoaning again the power of ‘the markets’ to make or break government policy he plaintively remarked that this ran counter to what Brexit was all about, namely: “Sovereignty. Democracy. Whatever the people want they get”.

For all that it is, indeed, just a tweet from a minor columnist, it perfectly captures the fatal flaw that runs all the way through Brexit, and through populism generally. It encapsulates the hopelessly na├»ve idea of sovereignty and all the myriad of ways that the ‘will of the people’ could supposedly trump any reality, whilst explaining how all those who pointed to reality could be reviled as ‘enemies of the people’. It is at once desperately sad and yet infuriatingly stupid. Like the realization that Father Christmas doesn’t exist, it would be poignant coming from a child and yet astonishing from a mature adult who writes for a national newspaper.

Sad and stupid as it may be, what is unforgiveable is the now indisputable damage that has resulted, with all of us paying the price for such delusions. The economic damage, especially, was clinically dissected in a truly excellent Financial Times video this week, laying bare impacts on trade, investment, inflation, growth, tax revenues, labour markets, regulatory duplication and more, and explaining that these can be separated from those of Covid and Ukraine. It also identifies many of the core issues, also discussed for years on this blog, of the dishonesty with which Brexit was sold and the incompetence with which it was executed, up to and including the mini-budget.

As the video explains, it’s this budget which can be seen as the point at which what many, including me, have called the ‘slow puncture’ of Brexit economic damage became something close to a tyre blow-out, albeit that doesn’t mean that the air has stopped leaking from the other tyres (for which, see some truly shocking recent additions to Yorkshire Bylines’ meticulously curated ‘Davis Downside Dossier’). And this is only to speak of the ongoing economic effects, without beginning to consider all the other harms. In any case, these harms are interlinked, for even if the mini-budget wasn’t an economic blow-out, it most certainly caused the political blow-out of Truss’s regime which in turn further exacerbated the damage to the UK’s global reputation as a politically stable country.

Overall, then, the current political chaos and economic turmoil have served to crystallize what has actually been under way for a while. Having won the 2016 vote for Brexit, the Brexiters have comprehensively lost the battle for the post-Brexit narrative which began at the end of the transition period, when the reality of being outside the EU began. There have been ebbs and flows in that battle but, although there will continue to be skirmishes, it is now effectively over. There is very little prospect that the majority public verdict that Brexit was a mistake will ever now change. If anything, that view is likely to solidify and grow. There is never going to be – indeed there never has been – any great national celebration of Brexit liberation. Hence all the weird contortions of so many pro-Brexit commentators and the embarrassed silence of others.

Breaking the silence?

Yet as the FT team – which has been consistently superb in its Brexit journalism since 2016 – also points out in its video, there remains a ‘conspiracy of silence’ about Brexit that extends beyond that of once garrulous commentators to encompass pretty much the whole of the Tory and Labour parties. Again, there have been countless posts on this blog about that ‘taboo’. The key question, then, is whether that will continue. Or, more likely, the key question is how and by whom it will be broken since it would seem absurd, and probably untenable, for the public narrative to have settled without the political discourse of the main parties responding to that.

It is highly unlikely that the current Tory Party will break the taboo as it enters yet another leadership contest. On past evidence, the realities of Brexit will scarcely be acknowledged and certainly it is almost impossible to imagine that any candidate doing so would have the remotest chance of winning. It would not only lose them the leadership, it would peel off swathes of the party’s electoral support to a rejuvenated Farageist outfit, such as is already being touted, and make its already bitter divisions even more sulphurous. The only real doubt now is whether Truss’s successor will be a madly extremist Brexiter or a semi-sane one.

So it is really a question of what the Labour Party will do. Of course the reasons for its near-silence are well-known. In some ways the current crisis encourages that silence to continue. For one thing, it makes it easy for Labour to avoid ‘rocking the boat’ by re-introducing the issue of Brexit to the fore of discussion: why do so when the Tories are imploding anyway? Might doing so actually give them a lifeline? For another – or perhaps it is a version of the same thing – it may be more effective to depict the crisis as a total failure of the Tory government, and not link that to Brexit specifically.

But there are several good counter-arguments, and they need to be thought about urgently because there must now be every possibility that there will be a General Election in short order. One such argument is precisely that a key part of the Brexit disaster is that of reality-denial. Until that denial is ended, there is no solution to Brexit or to the ‘Brexitification’ of politics. Another is, indeed, about the markets. Many commentators see in the collapse of the mini-budget a terrible trap for a future Labour government (in fact that was the point to which Tim Stanley made his sad little response): in rejecting growing government debt, it leaves ‘austerity’ as the only policy acceptable to markets. Thus if the Tory government falls then a Labour government would be forced to make massive spending cuts.

I am certain that this is to misunderstand what the market reaction to the mini-budget meant. That reaction was to the fact that Truss and Kwarteng’s plan was based on the total nonsense that reducing taxes would deliver growth and make government debt sustainable. It doesn’t mean that borrowing to fund public spending in ways that would plausibly promote growth would meet the same fate. Such spending would include infrastructure projects, environmentally sustainable and energy-saving projects, and significantly enhanced education spending. In particular, one of the most effective ways to boost economic growth, and to reduce regional inequalities, would be to create many new universities (it’s also a good way of growing the future Labour electoral base).

Even so, this alone would probably not be convincing enough without addressing Brexit. That is for two reasons. One is that, as I suggested in a recent post, the market reaction to the mini-budget was in part a reflection of the general reputational damage done to the UK since 2016. So Labour needs to break with Brexitism to restore that reputation with the markets, quite as much as with the general population. That involves being open and honest about the choices and trade-offs of Brexit. The other is that, more tangibly, addressing Brexit would be the quickest and most effective way of boosting growth, yielding fruit much earlier than, say, infrastructure spending.

A way forward?

A report from the Tony Blair Institute this week sets out the case, both political and economic, that Labour might adopt for a closer and more harmonious UK-EU relationship. It doesn’t go so far as advocating single market membership, which would certainly be a much stronger basis for economic growth than what it does propose, and that’s partly because polling doesn’t show enough public support for it. That could change, quickly, perhaps especially were Labour to provide leadership for it. But if there is an early election there may not be enough time now for that to happen.

So there’s a case to be cautious. One of the big prizes of – finally – talking about the realities and the choices of Brexit is, precisely, to be realistic, and that includes doing what has signally failed to be done before, namely to deliver a post-Brexit policy with some degree of consensus. Such a consensus is clearly going to be very different to what many remainers and leavers want, but what matters is for it to be something that enough of them are able to live with for now. And, related to that, part of the reputational prize is the creation of something that, by being relatively consensual, has the chance of being relatively stable.

To put it a different way, it would do no one any favours, including the EU or EFTA, for a Labour government to bring the UK into the single market only for the whole Brexit row to re-erupt and the possibility of leaving again to be immediately raised. So although the ‘Blair solution’ is much less than I, personally, would want, and certainly less than would be economically maximal, the slow and steady approach may just have to be accepted as part of the ongoing price of the madness and chaos Brexit unleashed: a long fall enforces a hard climb back. If it at least means the re-commencement of a more honest and more rational politics that would be a reward in itself, as well as contributing to a viable fiscal posture for a future Labour government. From that, campaigns for single market or even EU membership might be built in a less tortured and toxic environment. Anyway, regardless of what I want, I think the Blair route is the best that Labour is likely to go down, and, if so, it is certainly preferable to the present Labour policy.

A moment of hope?

If that analysis is right then, for all that it is hardly an exciting or enticing prospect, involving neither the arraignment of the charlatans and worse who caused the Brexit catastrophe, nor anything like a settlement of the grievances of those of us who tried to avoid it, there is at least something to be grateful for. Had the Brexiters had even an iota of skill or a scintilla of realism then they might have done even more damage than they have already done and are still doing.

In particular, perverse as it may seem, Truss has done us all a favour with her born-again Brexiter zealotry. For all its costs, having provoked a blow-out may prove to have been the quickest way of discrediting Brexitism and the libertarian, IEA version of Brexit. For Ian Dunt of the i the crisis marks “the end of the age of Brexit”, whilst in the FT Martin Wolf argues that, under Truss, “the Brexit Revolutionaries … over-reached” with the consequence that “maybe, the cold water of economic and political reality is at last breaking the UK’s Brexit fever”. Similarly, Annette Dittert, London Bureau Chief of Germany’s ARD TV, tentatively suggests that Truss’s failure could be the beginning of a turning point away from the “magical thinking” –  whatever the people want they get, so to speak  ­– about sovereignty which runs from the Brexit vote itself through the Johnson-Frost deal through to the mini-budget. She cautions, though, that the way back to pragmatism and realism will be via a long and painful process.

I would add that the next stage of that process is going to be one of continuing and deepening political crisis, because the current Tory Party is unleadable for all the reasons I wrote about during the summer leadership contest. To those will now be added the news and acrimonious scars of Truss’s implosion. It will take on a particular hue if, as is currently being floated, the Tories take the extraordinary and unconscionable step of resurrecting Boris Johnson.

That continuing crisis is going to be alarming to live through, especially if it is prolonged, rather than yielding an early election. But once an election comes, and if Labour win it convincingly on a prospectus that includes the breaking of the Brexit taboo, then there will be new possibilities which would not have existed had Truss’s version of post-Brexit Britain not crashed and burned in so dramatic a fashion.

Nothing is sure yet, of course, and this period of total disarray could take us in many directions, but one of them, uncertainly but not implausibly, is to a bridge away from Brexit and Brexitism. It is a slender and precarious bridge, lacking grandiosity of structure or much in the way of hand rails, and slippery underfoot, but it leads to a better future than seemed possible even a few weeks ago. For only the second time since June 2016 I feel slightly hopeful.

Friday, 7 October 2022

The best hope lies in this government’s hopelessness

The events of the last week are an almost textbook illustration of the point I made a couple of posts ago that “governments are constrained in ways that thinktanks aren’t, and even the most ardently ideological libertarian SpAD quickly finds that political reality is very different to the world of position papers and whiteboards”. If what has happened differs from the textbook it is because a normal government would take note of these constraints before going public with its policies. But this isn’t a normal government. Even its ferociously ideological but already bitterly divided Cabinet doesn’t get much of a say – it wasn’t consulted on the abolition of the 45p tax rate, for example – whilst the civil service and other institutions are ignored or derided as ‘the declinist Establishment’.

The result is that the operation of the constraints upon this government is being played out in public, adding reputational damage which in turn makes it even more constrained. The first, and probably administration-defining, instalment of it came with the market crash that followed the ‘mini-budget’, which I discussed in my previous post. Crucially and very much in line with my discussion, what it revealed to the world were exactly the reality-denying characteristics that make it a distinctively Brexit government. “Denial of what every investor can see to be true is a poor strategy for winning hearts and minds”, as the Wall Street Journal put it, whilst in the Financial Times the government was described as “mad, bad and dangerous”, composed of “zealots [convinced] that reality must adapt to their desires”.

As so often, law and policy commentator and blogger David Allen Green summed things up well by pointing out that what’s distinctive about this administration “is not that it has an ideology, but that it has nothing else. There is no engagement with the real world as it is, and no understanding that there is a real world outside with which to engage”. Meanwhile, another distinguished blogger, economist Simon Wren-Lewis, explained how this grows not coincidentally but directly from the evidence-denying, fantasy-based world Brexiters.

It’s only now becoming clear just how close the UK came to financial catastrophe last week, and that this was unquestionably as a direct result of a UK specific, ideological denial of reality rather than, as the government has dishonestly tried to claim, ‘global conditions’.

When reality bites back

Of course such criticism would be denounced by the government and its supporters as no more than would be expected of ‘the Establishment’, ‘declinists’ and ‘remoaners’. But here’s the rub: after a week of unequivocal insistence that there would be no backtracking on any of its provisions, an insistence defended by hapless ministers and roared on by many pro-Tory, pro-Brexit commentators (£), reality won out.

Announcing that fell to Kwasi Kwarteng, initially during a series of gritted-teeth media interviews on Monday morning, during which his studied Etonian arrogance was barely able to conceal that which is all his own. In these interviews, and his subsequent conference speech, he revealed the dropping of the 45p tax rate abolition measure on the grounds that it was proving a “distraction”, though this hardly suggested he understood exactly what the problem was and, in itself, only began to address that problem.

In the process, he was obliged to make positive references to the importance of the OBR, BoE and other institutions that had been sidelined or disparaged the week before, and which the libertarian Brexit cabal regard with such contempt. Very soon afterwards it seemed to be announced that publication of the full ‘medium-term fiscal plan’ would be brought forward from its scheduled date of 23 November, then that it wouldn’t and finally that indeed it would be, perhaps to later this month, and this time with an OBR assessment.

So that was three ‘U-turns’ in one fell swoop, or was it four or five? There’s an argument that criticism of governments for ‘U-turns’ is overdone, and that it’s actually a mark of maturity and good judgement to own up to and reverse poor decisions. We heard much of that from Tory MPs this week, including Brexiters who, strangely, always refused to countenance the idea that the poorest decision of them all, Brexit, could ever be re-considered. But in this case it’s not that we have a government that generally has sound judgement, but gets the odd decision wrong and has the character to admit it, it is that poor judgement is built into its very fabric by virtue of the Brexit-derived bunker ideology and arrogance I described last week. Nor was this a mid-stream blip: it was the government’s flagship policy and its first major act.

This also means that these U-turns don’t do much to fix its problems, beyond taking the immediate political heat off. It’s true that sterling recovered its value, but that doesn’t represent a vote of confidence in the government’s plans so much as expectation that it will have to continue to modify them. Nor does it prevent mortgage rates rising by more than would otherwise have been the case. What is especially important is that, although in the past rates have often been higher, the proportion of household incomes taken up by mortgage payments has shot up to the level of the late 1980s, just before the housing market crash.

It’s also true that the gilt markets rallied (i.e. prices rose and yields fell), but not to the levels they were before the mini-budget, so government borrowing will still be more expensive. So there is no sense in which the government’s reputation has improved or that it is now seen as trustworthy by the markets; the legacy of the mini-budget is a “credibility crisis” for the government (£) according to Sky News Economics Editor Ed Conway.

This won’t have been helped by Truss’s conference speech. Not that it was either a disaster or a triumph – it was quite dull, predictable in content, mundane in delivery – but because, like Kwarteng, she clearly doesn’t understand why the mini-budget got the market reaction it did and certainly doesn’t acknowledge any responsibility for it. That was shown in particular by her spiteful references to having to face down an ‘anti-growth coalition’ comprised of trade unionists, environmentalists, opposition parties, Brexit deniers, North Londoners, vested interests dressed up as thinktanks, liberal podcasters and so on.

At one level this was just entry-level populism, a recitation of enemies of the people, albeit an incoherent one in including almost no one who is actually ‘anti-growth’ whilst being so widely drawn as to include many traditional or potential Tory voters. At another level, it implied precisely the denial of reality which is the root cause of all her problems. For it wasn’t just that she depicted this coalition as the enemies of growth, but also as implacable opponents of her rejection of ‘the status quo’. By that, she meant precisely the supposedly revolutionary, anti-Establishment thinking of, well, the ‘vested interests dressed up as thinktanks’ that openly boast of owning her government.

But when this thinking was put into practice in the mini-budget it wasn’t these imagined enemies of growth who caused the markets to crash, it was cold-eyed traders who saw that it was completely unrealistic. The reason for that is entirely straightforward. The libertarian thinktanks she relies upon peddle theories, most obviously the Laffer Curve, which are untrue and have been repeatedly discredited. It’s that which she plainly doesn’t understand. It may be no coincidence that during her speech on Wednesday sterling and UK gilt prices both fell, and gilts continued to do so yesterday.

Can the fiscal plan be made convincing?

The events of the last week mean there is now no possibility that the government’s original plan of boosting growth through a combination of tax cuts and regulatory ‘reforms’, but without substantial immediate spending cuts, can survive, and it is spending cuts to which attention is now turning. But just as the mini-budget fiasco weakened the government’s market reputation, so too has it weakened even further than before its control of the parliamentary party.

Having seen the adamant insistence on the 45p rate crumble, literally overnight, Tory backbenchers are emboldened to oppose spending cuts, with the possibility of not upgrading welfare payments in line with inflation being the emergent battleground within a Tory Party now at total war with itself. It won’t be the only battle, because after years of spending cuts there is very little scope for new ones, and many Tory MPs are mindful that they were not elected on a manifesto of cuts and fear the electoral consequences. Truss has made what during the leadership campaign I called the ‘unleadable’ Tory Party even less leadable by her incompetence.

The same is going to be true of the deregulatory or ‘supply-side reforms’ in which the government places such faith to make its fiscal plan convincing, and which are central to its ideological dogma in their own right. We still don’t have much in the way of detail, but there is an expectation these reforms will include a more relaxed immigration policy, despite Home Secretary Suella Braverman’s almost psychotic insistence this week that net migration must and will fall. As her speech shows, if immigration is now allowed to rise this will open up the profound fissures within the Brexiter coalition, with Farage also already sounding a warning note.

It’s true that, under Boris Johnson, post-Brexit immigration controls were laxer than many leave voters will have expected or wanted – and for good economic reasons, which demonstrate one of the many fallacies of Brexit – but that happened very quietly. Truss seems set to relax them further, and much more publicly. Tory MPs who dislike that, or think their constituents will dislike it, will resist it, partly through fear of the revival of a Faragist Party. After all, it was the deep desire to see off Farage’s threat that drove Cameron to call the referendum in the first place. But if Truss now doesn’t make substantial relaxations to immigration policy then, as a supply-side reform supposed to promote growth, it won’t have any credibility, further damaging that of the fiscal plan.

Another major plank of supply-side reform is expected to be relaxation of planning laws and rules, perhaps generally or perhaps just in what are likely to be large numbers of new ‘Investment Zones’, as well as in the already announced Freeports. But that, too, is likely to be strongly resisted by many Tory MPs whose inboxes are already reported to be full of angry emails from constituents about it (£). One of the key reasons for the Tories losing the Chesham and Amersham byelection to the LibDems, just last year, was voters’ opposition to liberalising planning law, leading the then Housing Secretary Michael Gove to pause or abandon some of the changes, including those for what were then called ‘growth zones’.

So it is very likely that Truss will face strong opposition to her plans in this area, too, and it’s of note that it was Gove who spearheaded backbenchers’ public opposition to the ‘mini-budget’. There is already such opposition to the revival of plans for fracking, hence Jacob Rees-Mogg snuffling around for a way to get them through without too much scrutiny.

A farewell to EU retained law? Don’t bet on it

Much of this has nothing directly to do with Brexit (apart from the obvious fact that UK immigration control policies apply now to EU nationals), but another major part of the government’s supply-side agenda is to “review, replace or repeal” the entirety of retained EU Law by the end of 2023. In principle, it ought to be easier to get political support within the Tory Party for this, and repeating the pledge during his conference speech earned Kwarteng a cheer. But it’s highly likely that “repeal” was the word that excited them, and if the years since 2016 have shown anything, it is how much easier it is to get Brexiter cheers for slogans than it is to deliver what their content implies.

For despite what some imagine, and others fear, it is not going to be quick or easy to deliver on this promise even though the government is arrogating to itself enormous powers to act by ministerial decree, thus avoiding extensive parliamentary scrutiny. In practice, it’s likely that much of EU retained law will continue to be retained, either temporarily or permanently, rather than be allowed to expire under sunset clauses. That’s because, often, repealing without replacing would lead to immediate chaos, with cliff edges over which businesses will drop overnight. True, that might not deter this government, which may be too arrogant to consult in order to understand the consequences, or too reckless to care, and simply go ahead on the basis of its ideological convictions. Indeed, the mini-budget shows us exactly that possibility. But it also shows us how quickly the government can then be forced to backtrack. 

Of course, there may be particular issues Truss selects to stand firm and fight on, and which these are will become clear in due course. But given the volume of law in question, and the timescale of making decisions by the end of 2023 that is anticipated, there aren’t likely to be many such cases. That’s partly because each one will encounter political opposition from both inside and outside the Tory Party. But there also issues of administrative bandwidth, especially when the government also wants to cut the civil service, and these apply not just to ‘repealing’ retained EU law but to ‘replacing’ it or, indeed, simply ‘reviewing’ it as a prelude to either of these.

Those elusive Brexit freedoms

There are already good examples* of how complex and time-consuming replacing EU regulations is, most obviously that of REACH, the EU’s chemicals regulation system, now effectively reproduced as REACH UK but with many features still subject to long transition periods. It is also expensive, and fundamentally pointless, certainly from a free-market, deregulatory perspective, since it creates a double regulatory system for those firms which operate in both the UK and the EU, increasing their costs, whilst also being protectionist in at least potentially discouraging non-UK firms from serving the UK market, reducing customer choice.

A not dissimilar example is the attempt to replace the EU’s CE conformity assessment marking regime with the UKCA mark, which has persistently been delayed and now appears to be in limbo. Again, the main criticism is that it simply creates a double regulatory system, disadvantaging UK firms and potentially UK customers. As to what is going to happen now, it’s not clear. As things stand, goods without the UKCA mark (or the UKNI mark, another complication, as I discussed last August) will not be legal on the Great Britain market from the end of this year. Since that deadline is less than four months away, it must be at least questionable whether it will be met.

The UKCA case is particularly instructive as it shows three related issues coming together. One is that the way it has been endlessly postponed shows the problem of lack of administrative bandwidth (and, for that matter, the capacity of businesses). Another is that only after it had already been set in train did Brexiters, in this case Jacob Rees-Mogg (£), actually realise what was obvious to anyone not obsessed with Brexit deregulation, namely how inefficient it would be. And, thirdly, perhaps due to a combination of these things, it shows how easily the Brexiters lose interest in things they used to be so excited about, like children who have begged for months for a new toy for Christmas, only to discard it as dull and disappointing on Boxing Day.

In fact, Brexit is already littered with half-finished projects, a current example being the delay in the planned switch-off of the CHIEF customs system on 1 October. Like discarded presents, they still cost money though, unlike such presents, they can’t really be discarded and have to be made to work, somehow, even if the Brexiters themselves have moved on to some shiny new attraction.

Why reforming Solvency II just got harder

One such attraction expected to feature prominently as part of the ‘supply side reforms’ looks set to be replacement of EU GDPR with a domestic data protection regime, which has long been in a Brexiter ambition. If so, the problems posed will inevitably be very similar to REACH UK and UKCA. A more interesting example is the replacement of the Solvency II directive, governing how much capital insurance companies must hold as reserves, to protect against insolvency, versus how much they can invest to gain a return for policyholders. Again, this has long been in the Brexiters’ sights and is a prime candidate for Truss’s growth agenda as, potentially, it would unlock really substantial amounts of investment funding.

As I discussed in a post in February this is another highly complex and technical area, but it is also one where the Brexiters actually have a reasonable case for reform (for that matter, the EU has also been considering similar reform). That’s partly because Solvency II is arguably over-cautious but also because, given the size of the UK insurance industry, it’s not absurd, as it is in most sectors, to envisage a UK-specific regulatory approach or even such an approach becoming one that other jurisdictions might follow.

Be that as it may, the fundamental dilemma is the balance of reward (unlocking investment funds) and risk (insolvency of insurance firms), and it is one which splits opinion in the financial community. And here the Truss government may pay a particular price for the damage of the mini-budget. On the one hand, the market instability it caused showed the potential fragility of even the largest pension funds, and possibly more to the point that of banks, and also led to several UK property-focussed investment funds restricting redemptions this week (i.e. limiting how much investors can withdraw), a more minor but not dissimilar reminder that solvency matters. Might that then tip the calculation of risk and reward against relaxing Solvency II regulations?

On the other hand, as I and many others have repeatedly stressed, the mini-budget revealed an evidence-averse, fantasy-based Brexit government. As such it has contempt for financial institutions and seems to treat all risks as something to be dismissed as ‘Project Fear’. So would such a government be trusted by financial actors to have undertaken a serious assessment of the balance of risks and rewards in the case of Solvency II? It’s a neat illustration of how the libertarians’ Brexit Britain can’t simultaneously embody a spirit of iconoclastic revolutionary ardour, at war with the global Establishment, yet also expect to be a trusted, stable pillar of the global order.

The general picture on post-Brexit deregulation

So, coming back to the more general point, the so-called Brexit Benefits Bill to sunset EU retained law, and in the process to deliver some of the supply-side reforms to make the fiscal plan credible, is not going to work in anything like the way that the government appears to imagine. Either there will be yet more chaos, with regulatory systems simply falling into disuse, unreplaced. Or there will be botched regulatory change because there wasn’t time to create functioning new systems. In either case, there will be further political damage to the government, not to mention the economic damage. Alternatively, there will be endless reviews in which it is decided to retain EU regulations or at least to postpone their replacement or their repeal. This will also cause political damage because it will infuriate those Brexiter MPs and commentators who have been complaining for months about what they saw as lack of progress under Johnson and which they expected Truss to rectify.

Throughout all this, the government’s claimed and defining objective of economic growth will be seriously undermined because regulatory uncertainty and/or chaos is a profound disincentive to business investment (£). As with the rush to ‘get Brexit done’, leading to the premature triggering of Article 50 and the refusal to extend the transition period, this latest rush to drop retained EU law is a recipe for incompetent delivery.

Ironically, were the Brexiters to slowly, calmly and pragmatically work through a prioritised list of realistic and worthwhile regulatory changes then they might have more success. But, then, if they had the facility to do that they probably wouldn’t have been Brexiters in the first place.

Northern Ireland: a glimmer of pragmatism

It’s possible that, apart from dropping the top-rate tax proposal, another way the reaction to the mini-budget has forced a change in the government’s thinking is by adding weight to the pre-existing case that it would be crazy to add a major row with the EU over the Northern Ireland Protocol to all its other woes. Whatever the reason, some movement in its position is suggested by the astonishing comments made by Steve Baker, the most hardline of Brexiters and now Minister of State for Northern Ireland, during the party conference and repeated in a subsequent interview in Irish media. In them, he offered an apology to the EU and to Ireland for some of the UK’s, and his own personal, conduct during the Brexit process, and expressed a desire for a harmonious agreement from the Protocol negotiations, in which the UK “needed to show humility”.

Subsequently, a spokesman for Truss confirmed that Baker “does speak for the government” (although in an interview, as well as saying that, she also said that Baker “speaks for himself”). That apparent ambivalence isn’t the only reason for caution. Baker also spoke of his support for the provisions in the Northern Ireland Protocol Bill which, if insisted upon, would preclude a negotiated solution, and other ministers, including Rees-Mogg, made much less conciliatory remarks during the conference.

Even so, there is generally a palpable sense of an improved mood, and Baker’s remarks were warmly welcomed by the Irish Taoiseach. It’s a sense compounded by the resumption of ‘technical talks’ about the Protocol yesterday, as well as by Truss’s participation in the inaugural meeting of the ‘European Political Community’. That is a positive and potentially important development in its own right, at least in implying a recognition that UK interests are bound up with those of the continent it is a part of, urgently as regards energy security, and perhaps a sliver of hope for the future after years of Brexiters revelling in the most grotesquely insulting behaviour (many examples other than that linked to could have been chosen).

It's certainly possible to read Baker’s comments not just as preparing the ground for a deal with the EU but as ‘pitch-rolling’ to acclimatise the ERG to such a deal being struck. If so, a key question will be how they react. Truss’s evident political weakness is an incentive for them to rebel, whilst the fanaticism of at least some of them means that even someone with Baker’s impeccable Brexiter credentials may simply be denounced as a turncoat. Unsurprisingly, Kate Hoey has already dismissed what he said (£), as of course has the DUP.

Predictions are difficult because, as has always been the case, the British government has no coherent, realistic or consistent position on the Protocol, ultimately because Brexiters have never faced up to the realities of what Brexit means for Northern Ireland. So it is always a matter of reading the runes to try to work out what its intentions are. It could be that all that is happening is preparation for the UK to announce that, despite all its efforts to be conciliatory, ‘the EU refused to cooperate’.

Still, it does seem more likely at the moment that the government is set to be more pragmatic than at any point since Johnson and Frost started agitating against the Protocol they themselves had negotiated and agreed. Whether that reflects a genuine change of heart or the pressure of other events is impossible to know. In the short-run that may not matter if a deal can be reached. In the long-run it does because, as happened with the Protocol itself, it is always possible that anything agreed now will later be disowned by the Brexiters as having been ‘forced upon them’.

The mixed blessings of having a hopeless government

Much that is in this post reflects a point I’ve made repeatedly over recent weeks, which is that the political constraints facing the Truss government in delivering an unpopular, unmandated agenda explicitly derived from libertarian thinktanks are formidable. Even Jacob Rees-Mogg, in his trademark faux-aristocratic drawl, as if he learned English by listening to language school records from the 1930s, recognised that this is so when he explained to disappointed Tory delegates that leaving the European Convention on Human Rights (ECHR) is not politically viable. Although, as with immigration policy, there is a contradiction because, at the same time, Suella Braverman is supposedly going to legislate so that no ‘European judge’ can intervene in UK deportation decisions. But such legislation would be meaningless for as long as the UK is an ECHR member.

Such contradictions abound because there is a constant tension between the extreme measures that many of the government would undoubtedly like to take and the constraints, whether of politics or practical deliverability, on adopting them. Indeed the increasingly erratic Rees-Mogg reportedly had his proposals for a “bonfire of employment rights”, including the Brexiter favourite of abolishing the 48-hour limit derived from the European Working Time directive, “quashed” by Truss for being “half-baked”. It’s quite something to think that even the Prime Minister isn’t quite as mad as the Business Secretary, although on other issues it seems that the polarity is reversed (£).

We should be grateful for small mercies and, of course, these political constraints don’t mean that this government will not do huge damage the longer its stays in office. There is much to be depressed and anxious about in having a government so woefully incompetent. It will leave a gargantuan mess to be cleared in the years that follow its departure.

Yet that might have some consequences that Brexiters don’t like. If, as some of them fear, the failure of this government will derail or discredit Brexit then its very incompetence may well contribute to their fear coming to pass. Truss has identified the ‘Brexit deniers’ – meaning, presumably, those who deny it was a good idea since no one can deny Brexit has happened – as amongst her opponents. So if by her actions she provides further evidence of its folly their numbers can only increase. Ironically, as well as being deeply depressing, the most hopeful thing about this government is how utterly hopeless at governing it is proving itself to be.

 

*For a wealth of detail on the progress or otherwise of UK divergence from EU regulations, see the UKICE tracker.

There will be no blog next week.