Five years on: stuck

As we approach the fifth anniversary of officially leaving the EU, even those who still profess to support Brexit are hard-pressed to explain what the point of it was, and scarcely bother to try. That lack of purpose was underscored by Kemi Badenoch's recent admission that the Conservatives took Britain out of the EU “without a plan for growth”. This wasn’t, as some have taken it to be, an expression of ‘Bregret’, but it was the first time a senior Tory has accepted that the manner in which Brexit was enacted was flawed and, at least by implication, flawed in ways which have done economic damage. Effectively, Badenoch repeated the critique Farage made in 2023 of the Tories’ handling of Brexit, one which Rishi Sunak denied at the time.

In that sense, it was a relatively easy critique to make, since the Tories are no longer in power, and Brexit is always at its shiny best when presented by those without responsibility for its implementation. What, like Farage, Badenoch cannot admit is that this lack of a growth plan (or any plan) was inherent to Brexit and not simply a matter of ‘mismanagement’. On the one hand, there was no way of delivering Brexit that would not have been economically damaging. On the other hand, there was no consensus view amongst Brexit’s advocates and voters as to what the (economic) plan of Brexit was meant to be. So it’s not just that any Brexit plan would have been damaging, it’s that there was no political basis on which to make even a damaging plan.

A Brexit wobble?

Nevertheless, Badenoch’s admission is significant, especially when taken in conjunction with the very different intervention from the LibDem leader Ed Davey, calling for the UK to agree a new customs union with the EU. As Lewis Goodall of the News Agents pointed out on his Substack last week, these developments mark a “wobbling” of the “shallow but broad political consensus in Westminster [whereby] no-one much liked [the Johnson agreement] but few wanted to re-open it, for fear of the daemons therein”. That assessment of Westminster is broadly true, especially given the reduced SNP presence in the current parliament, and it is certainly true that for both Tories and LibDems what their leaders have now said represents a departure from their election manifestos.

It is, however, only a ‘wobble’. Brexit still isn’t, for now at least, a major, overt part of political debate, and I think Goodall is right to say that the immediate consequences for how the government acts in relation to post-Brexit decisions are quite limited. Badenoch’s comments at least give cover for Keir Starmer’s line that the Tories made a mess of Brexit, whilst those of Davey at least potentially extended the terrain of what is discussable. But – and it is a very big ‘but’ – there is very little sign that the government has any desire, or even any idea, of how to escape from the very narrow parameters it has assigned to Brexit.

Labour’s narrow vision

More specifically, it is striking that, the ‘reset’ notwithstanding, Starmer’s government’s approach to Brexit sounds very similar to Badenoch’s, and, actually, to Rishi Sunak’s. Thus, Business and Trade Secretary Jonathan Reynolds dismissed Davey’s intervention as showing that the LibDems “only ever think about Europe” and babbled about how “this is a government that wants to improve that relationship with the EU but also wants to do work with the US, with India, with the Gulf”. That’s boilerplate Brexiter stuff, which could as easily have been said by Sunak.

Where both Reynolds and Rachel Reeves have an at least arguably better case is in saying that part of the cost of Brexit was the political instability and business uncertainty it created, and that revisiting the question of a customs union would mark a return to that. After all, how viable would it be to do so when there is a fair prospect of a Tory, or even a Tory-Reform, government returning, Trump-like, in 2029 to reverse it? On other hand, if economic growth is the government’s central mission, that is what should be driving policy. There’s not much point in banging on about having a ‘Plan for Change’ and then discounting change because it would produce instability. At all events, even if the government judges that a customs treaty is not politically feasible now, Starmer could still have made use of the opportunity Davey provided to nudge Labour’s Brexit parameters just a little.

Even leaving aside a customs union, the most obvious way to do so would have been to signal an intention to rejoin the Pan-Euro-Mediterranean (PEM) Convention on rules of origin. The case for doing so has been discussed again recently by customs expert Dr Anna Jerzweska and, crucially, it is something which would sit within the framework of the existing Trade and Cooperation Agreement (TCA). Significantly, this week Maros Sefcovic indicated that the EU is open to the idea of the UK joining PEM.

Even for the most rabid Brexiter, PEM membership is actually fairly uncontroversial, to the extent that the ‘instability’ argument almost certainly doesn’t apply. It’s not difficult to imagine that the Sunak government would have done it, and it’s quite likely, in my view, that it will eventually become Labour policy (the government had already begun consulting businesses about the idea). But it would have been far better had the overture come from the government when Davey provided an opening (if not, indeed, before) as something the UK is pro-actively seeking as being in the national interest.

As it is, Sefcovic’s comments have already been reported in the pro-Brexit press under the headline “EU plots to drag UK back into bloc”. No doubt something similar would be said had Starmer proposed it, but had he done so it would have put the government on the front foot. Instead, Labour are reduced to making the mealy-mouthed response that the UK “does not currently have plans” to join PEM, whilst confirming that doing so would not cross the government's 'red lines'. This keeps the door ajar, but also invites cries of ‘giving in to the EU’ were the government ever to step through it. It’s truly pathetic.

An even more striking illustration of the continuity of Labour and Tory policy is how, when Badenoch was asked how she would approach Brexit if she were in power, she came out with exploiting areas like technology and AI. This, of course, was Sunak’s pet project and, now, has been adopted by Starmer as the key to delivering “a decade of national renewal” with his rather oddly-worded desire to “mainline AI into the veins of this enterprising nation”. Such an ambition might not, in itself, be related to Brexit, but the government clearly sees it as being so. Thus, according to Reeves:

“There are opportunities outside the European Union, opportunities, for example, like AI, where we have a very different regulatory approach to AI compared to the European Union’s approach. That makes Britain a more attractive place for AI and tech companies to invest than in other European countries.”

Once again, this is boilerplate Brexiter stuff.

Strategic incoherence

The convergence of how Starmer and the previous Tory government talk about AI regulation is the starting point of an excellent piece by Joël Reland of UKICE. In it, he points to other ways in which the current government shows a proclivity to “flirt” with regulatory divergence whereas, in practice, “its revealed preference … is to align with EU standards”. This preference was further revealed by the government’s decision this week not to allow the ‘Stormont Brake’ to be pulled over chemical labelling regulations. This was the latest evidence that, as the BBC’s John Campbell argues, the government’s general approach will be to align the whole of the UK with any EU rules which apply, by virtue of the Protocol and Windsor Framework, to Northern Ireland.

There are several points within Reland’s analysis which are worth flagging or amplifying. One of these is the basic fact “that the UK is a second-order regulatory power”, and always liable to be pulled by ‘the Brussels Effect’ towards EU regulations. This would be the case anyway, because so much of the UK’s trade and supply chains are bound up with the EU, but, as the story about chemicals labelling illustrates, Northern Ireland makes it more so. That’s because, at least as regards goods regulation, UK-EU divergence also has the consequence of GB-NI divergence, so to avoid the latter requires also avoiding the former.

Another important point made by Reland is that Labour’s approach has, or potentially has, numerous contradictions because decisions taken in one regulatory area can conflict with those taken in another. This, I think, is the flip-side of, or perhaps just another way of expressing, the argument I made last August about Labour’s lack of a post-Brexit strategy. That argument was more focussed on what the government wants from ‘the reset’ per se but this is inseparable from a coherent regulatory strategy.

For example, it was reported in the FT on 8 January (£) that UK plans to diverge on gene editing regulation* are being delayed as they would potentially make the government’s key stated reset objective of an SPS deal impossible to achieve. However, the article reported:

“Defra declined to comment when asked whether it was delaying the legislation as a result of the warnings from Brussels. It also declined to repeat on the record its previous commitments to introduce the legislation or set a timetable for doing so.” 

Yet the next day, in the same paper, it was reported (£) that the Environment Secretary had said that the UK (presumably, Great Britain) would go ahead, with the legislation to come into force by the end of March.

It remains to be seen what will happen, but the point is that these reports, in a reputable outlet, written by reputable authors (including Peter Foster, who was a co-author of both of them), and published just a day apart, were able to tell quite different stories because the government itself failed to provide a consistent line.

What this illustrates isn’t (simply) the incoherence of the government’s approach, it is the incoherence of Brexit itself. Specifically, Brexit was wrongly seen as a way of removing regulatory ‘red tape’ and also as a way of gaining regulatory independence. From that, a great deal has flowed for what Brexit has meant in practice, but two issues, in particular, are now coming to the fore.

Lack of regulatory capacity

One, which is highlighted by Reland and by yet another recent piece by Peter Foster in the FT (£), is that it has thrown so much responsibility for regulatory infrastructure on to domestic agencies. It is not just post-Brexit trade and customs bureaucracy which have made nonsense of the Brexiter claim that leaving the EU would reduce ‘red tape’, it is also the repatriation of regulatory functions. Regulatory independence does not simply mean, as the Brexiters’ simplistic slogan had it, “taking back control of our laws.” It also entails developing regulatory capacity, as what was once provided on a pooled basis by the EU now has to be provided by the UK.

Right across the board, the British State is creaking under the weight of these demands, with underfunded, understaffed, and underperforming agencies. Examples given by Foster include the Food Standards Agency, the Competition and Markets Authority, the Health and Safety Executive, and the Medical and Healthcare Products Regulatory Agency. Now, and partly in response to this, the government has created the Regulatory Innovation Office, to update regulation and speed up decisions, with a particular focus on high-tech areas.

This may be no bad idea, including its recognition of the interconnectedness of some of these areas, but that also means that it sits astride a number of existing agencies, including some of those just mentioned. Arguably, that just adds another layer of organizational complexity and cost to an already creaking regulatory infrastructure. After all, there is something rather ‘Yes Minister’ about a kind of ‘regulator to regulate regulators’ in order to ‘cut red tape’. So, for now, the jury must be out on whether all this can possibly add up to the regulatory ‘nimbleness and agility’ promised by Brexiters in the past, and now embraced by Labour as part of its growth agenda.

The cold world of geo-politics

Whilst the Brexit policy of ‘regulatory independence’ creates many new costs, the second issue arising from it is that it is based on an illusion which founders on the rock of geo-political reality. This is partly the familiar matter of there being two or perhaps three regulatory superpowers, the US, the EU, and China. But, more particularly, it is about how, exacerbated by the return of Donald Trump, regulation is both an arena and a weapon of international conflict and competition. That is currently most evident in relation to social media regulation and AI regulation, but it also extends to less high-profile areas.

Many of these issues are highlighted in a recent, excellent, report from Marley Morris of IPPR on UK trade strategy. It is a wide-ranging analysis which is well worth reading in full, but, to take one example, before long, the UK needs to decide about whether to seek linkage of EU and UK Emissions Trading Schemes (ETS). Doing so, as Foster points out in his discussion of the IPPR report, is likely to be seen negatively by Trump. So, whilst this may be a decision for the UK, it is not one which can be taken in isolation.

The wider implication is that Trump’s ‘with me or against me' world view means that he will treat any UK decision – not just about relations with the EU, but with China, Russia, etc. – as a hostile act and a personal affront. And, in Trump-world, that means punishment. It is this world view which, as Rafael Behr argues, is rapidly going to force the UK to make “hard choices” which need to be “informed by a coherent strategic purpose”, and these choices go well beyond, though they include, those relating to trade and regulation.

In turn, this exposes the paucity of Brexit as a project of ‘sovereignty’. Not only was ‘freedom from Brussels’ largely illusory, it also increased Britain’s exposure to international power plays at precisely the time they have become more vicious and less predictable.

Is a strategy even possible?

In this sense, post-Brexit Britain’s problems are not simply those of lacking a plan for what to do with Brexit, they are those of being saddled with something with which little can be done. Having been touted as the solution to all Britain’s problems, Brexit has now become Britain’s foremost insoluble problem.

The Brexiters certainly don’t have an answer, and, if they say anything at all, simply continue to repeat already failed ideas, the most recent example being an embarrassingly feeble analysis by ‘Brexit brain’ Shanker Singham. It includes another outing for wide-ranging ‘mutual recognition agreements’ as the solution to the damage of Brexit. Meanwhile, poor old Robert Tombs, one of the original ‘Brains for Brexit’ is reduced to pondering why he was wrong to have “imprudently predicted that life outside the EU would so quickly be taken for granted that it would be hard to find anyone admitting to having voted ‘Remain’” only to come up with the half-baked idea that “Anti-Brexitism has become part of the ‘woke’ agenda.”

However, the Labour government has no real answer either. And whilst I agree with Behr, Reland, Marley and others who, in various ways, argue about the need to develop a coherent post-Brexit strategy, perhaps the stark reality is that no such strategy is possible: Brexit was strategically incoherent from the outset, and has only become more so. If that is so, there are just different versions of muddling through, some slightly better and some slightly worse, although the difference, small as it may be, shouldn’t be completely dismissed.

Of course, many people, perhaps especially readers of this blog, would say that there is an obvious answer, and it is to join the EU. And, although that wouldn’t resolve every problem for Britain, with Trump embarking on a far more internationally aggressive presidency than his first, and his acolytes explicitly attacking our country, the case to openly re-evaluate Brexit is stronger than ever. But, the recent ‘wobble’ notwithstanding, there’s no real sign of that happening. In May 2019, I wrote about Brexit as “an aporia, a pathless path, with no way forward and no way back”. Five years on from leaving the EU, that remains the case.

 

 

*This has long been seen, not just by Brexiters but by many scientists and commentators, as a regulatory area where the UK could benefit from divergence, and legislation has long been in progress (see my post of February 2022 for some discussion). But my point here isn’t about whether it is desirable or not, but about how it illustrates the lack of a coherently designed and clearly communicated regulatory strategy.