Professor Chris Grey’s latest Brexit analysis on the continuing Internal Market Bill fallout, the lack of business and border preparedness for deal or no deal, the growing obviousness that not extending the Transition Period was a massive error, and thoughts on where it is all heading.
First published in September 2020.
By recent standards it has been a relatively quiet Brexit week, although also a revealing one in which several chickens have come home to roost as the end of the Transition Period looms ever closer.
The official negotiations resume next week, whilst the ongoing unofficial talks are reported to be progressing “a bit better than expected” according to an EU official. That perhaps means little given how low expectations must have been after the fury in Brussels caused by last week’s events. One cause of that fury – the wholly spurious claim of an EU threat to blockade Northern Ireland’s food supplies, as discussed in my previous blog – has been quietly dropped by most politicians for the nonsense it is, although even that was portrayed in the Brexiter press as ‘Barnier caving in’. The damage, of course, is already done.
The IMB fallout
The bigger cause of that fury remains in play, with the passage through Parliament of the Internal Market Bill (IMB), the measures of which include, on the government’s own admission, a knowing breach of international law. However, the rumours I mentioned in my previous blog to the effect that the government would seek to slow down the passage of the legislation so as to avoid a confrontation with the EU until after no deal seems inevitable (if that is what happens) seem to be true. And if there is a deal the offending clauses may be pulled. Meanwhile, whilst continuing to consider the possibility of taking legal action the EU is holding off doing so for now. The sense is that, for the time being, both sides want to pull back from last week’s row and, as Peter Foster of the FT puts it, “a grudging truce has settled back” over the talks.
Nevertheless, the reverberations of Brandon Lewis’s incendiary statement about breaking international law, which is still being defended by the Attorney General, continue to be felt. Some MPs have tried to downplay the significance of what Lewis said but Theresa May, in particular, launched a blistering attack on it during the committee stage this week. For reasons I’ve given elsewhere I do not buy the line that May’s deal was one that should have been supported, and personally I doubt that history will treat her kindly. Much of the current Brexit mess can be laid at her – and her advisers’ - door for the early decisions she made, and for those she did not. Even so, she has recognizable political principles which is a very marked contrast with the corrupt, incompetent and anarchic mess of the current administration.
One indicator of how that administration operates came with the report that Brandon Lewis’s statement was effectively dictated to him by a Downing Street advisor “who gave [him] the words to say”. The advisor, Oliver Lewis (no relation, I assume), is one of several central figures from the Vote Leave campaign – he was its Research Director – who, led by Dominic Cummings, are now installed as special advisers and seem to have been allowed by Johnson to become the de facto government. Many of them are very young, have little or no experience of government and, it’s perhaps fair to say, a greater degree of confidence in their own abilities than a more objective analysis would warrant.
The report stresses that Boris Johnson was barely involved, but perhaps even more shocking is the idea that a member of the Cabinet should, apparently, be taking orders of this sort from an advisor. But it is a measure of the extent to which this under-achieving but over-empowered cadre are able to wreak havoc, whether through abrasive arrogance or plain incompetence. For Brandon Lewis’s words, spoken at the dispatch box of the House of Commons, will leave a long and damaging mark, regardless of the fate of IMB.
Are you ready? Er, no
Oliver Lewis is Johnson’s ‘no deal’ adviser, and is reported to have repeatedly blocked progress in the negotiations with the EU. Whether or not he continues to do so, this week saw the passing of the notable milestone of it being only 100 days until the transition period ends – there are far fewer working days, of course, and fewer still until a deal, if there is to be a deal, has to be finalized for ratification. A new government communication drive marked this moment by asking “are you ready?”.
The answer from numerous business sectors is a resounding no, almost as much so if there is a deal as if there isn’t. The issue here is partly that businesses are overwhelmed by dealing with coronavirus, but the truly shocking thing is the lack of clarity over what they have to prepare for. This was re-affirmed by reports of a meeting at the end of last week between the government and the road haulage industry, which pronounced it “a washout” as the government was unable to provide the details needed of how border systems will operate. As regards business more generally, the British Chambers of Commerce this week published a list showing that no less than 26 out of 35 key questions about a range of post-transition issues remain unanswered.
Road haulage is a crucial industry, so it is a very serious matter that is not likely to be prepared even if there is a deal. This week a leaked letter from Michael Gove suggested that a staggering 70% of EU-bound trucks might not be ready for the new border controls, leading to thousands of lorries facing two-day waits at Dover (in passing, note that almost all the focus seems to be on Dover: much less is said of the significant problems other ports will face).
Subsequently, speaking in parliament, Gove revealed that only a quarter of businesses believe that they are fully ready for the end of the transition period (and that doesn’t necessarily mean they are, by the way), whilst an astonishing 43% believe that the period will be extended. Unless the data were collected before the end of June that is, effectively, an impossibility and perhaps reflects a complacency born of the repeated Article 50 extensions.
But his most remarkable, almost surreal, statement was that, in order to reduce congestion at the ‘short Channel’ ports, there will be a de facto border for trucks entering Kent, which will need special ‘Kent Access Permits’ to be enforced by the police. Who knew that ‘taking control of our borders’ was going to lead not just to erecting a new one in the Irish Sea, but also one around Nigel Farage’s home county?
Separately, it has recently been reported that the development of the new IT systems that will be needed for the UK-EU border is in chaos, and a study published this week by the LSE shows the extent of the disruption to supply chains, especially in the food and drinks industry, that will occur at the end of the transition, again especially if there is no trade deal in place. And a new British Chambers of Commerce survey finds that 52% of UK firms trading internationally have not yet considered the effects of Brexit. But some industries, such as banking, are continuing to shift jobs and operations from the UK to the EU without waiting to see if a deal is done or not.
Whereas the damaging effects of the new border controls will be immediately obvious – queues, supply disruptions and price rises – those of things like banking relocations and their associated impact on tax revenues will be less visible, but no less real.
Incompetence piled on dishonesty...
Since most of the new customs requirements will exist regardless of whether there is a trade deal, the government has been woefully neglectful in leaving the preparations so late. This can be chalked up to general incompetence but there is also a specifically Brexity twist to it. For years talking about the need for such preparations was either dismissed as more Project Fear or made more difficult to admit or be taken seriously because of the ingrained power of the Project Fear narrative. Relatedly, even now there are still Brexiters, perhaps including some in government, who genuinely believe that there is some form of trade deal which avoids the need for borders, as if it were possible to have “the exact same benefits” as single market and customs union membership.
After all, it was not until February 2020 that the Border Delivery Group was established (as an aside, later, its leadership appeared to be a casualty of the witch hunt for supposedly ‘Remainer’ civil servants), and although that was not the beginning of the government’s border preparation work it was the first point at which it was officially acknowledged that ‘frictionless’ trade post-Brexit was impossible.
It is worth pausing to reflect on the almost unbelievable dishonesty of this. Even soft ‘Norway style’ Brexit would have had some implications for border friction, but from the moment in January 2017 when hard Brexit became confirmed as the official position any possibility of anything like ‘frictionless’ trade disappeared. No free trade agreement could prevent that. Many experts on trade and customs, many business groups, and many commentators including relative minnows like me were screaming this. Yet it was three whole years before the government officially accepted that this was so, and even then it was not until July 2020 that it published its ‘Border Operating Model’, less than six months before it needs to come into force.
We already know that one of the government’s responses to the border chaos which on Gove’s admission now seems inevitable will be to blame businesses for lack of preparations, which is outrageous considering that the government still can’t give precise details of what they need to do. But we also glimpsed another of the ways the government will respond because it was pre-figured by DEFRA Secretary George Eustice in Select Committee evidence this week: blaming it on the “failure of the EU to plan”. It’s a charge as predictable as it is ludicrous (see the various reports in the Twitter thread link).
Such responses are at one level just boilerplate political blame deflection but, more profoundly, exemplifies the refusal of Brexiters like Eustice ever to take responsibility for the consequences of their actions. For that reason alone, it’s important to keep recording and reminding people of the promises that were made for, and the lies told about, Brexit.
The consequences of no deal would of course be that much greater – as set out in an excellent, comprehensive report this week from the UK in a Changing Europe thinktank, covering not just trade but implications for transport, data, citizens, Northern Ireland, and security amongst other things. One issue not mentioned, but in the news again this week, is the ongoing saga of Galileo, the EU’s GPS satellite navigation system, with the announcement that the UK has abandoned attempts to build its own alternative system and the suggestion at least that the UK might try to rejoin Galileo.
This is a convoluted story, going back to 2018 when Theresa May pulled out of talks with the EU because of its insistence that the UK could have only limited, third country access to the system and announced that the UK would build its own version (although some experts thought that a compromise deal was possible) at an estimated cost of £5 billion.
That idea was enthusiastically taken up by Johnson (and reportedly driven by, again, Cummings against, or without, expert advice) who decided to buy a bankrupt satellite firm, OneWeb, to deliver it. But in June this year substantial problems emerged (the whole sorry story to that date is well told by Alex Andreou in Byline Times) and the idea has now been dropped. It is unclear at this point what will happen, but the impacts for businesses and for defence are massive. Again, there is less than 100 days to sort this out, but that timescale is a luxury compared with that faced by some UK citizens living in the EU who are customers of those banks which this week announced their accounts would be closed – in some cases before the end of the year.
Piled on even more incompetence
It is becoming clearer by the day, especially in the light of the predictable resurgence of coronavirus, that Johnson’s refusal to extend the Transition Period when he had the chance was a major and possibly catastrophic error of judgment. Far from putting pressure on the EU to ‘blink at the last minute’, it has left Britain woefully unready to cope even if there is a deal. As with the inevitability of an end to frictionless trade, the government was warned over and over again by business bodies and others that this would be the case but chose to ignore them.
Whilst far smaller in magnitude, I think it was also an error of judgment for Keir Starmer not to have at least placed on the record at the time that this was a huge mistake. Even now, in his first conference speech as leader, he said very little about Brexit and did not mention the failure to extend transition at all. I understand perfectly that he needs to avoid being depicted as a ‘Remainer’, as Johnson wishes to do. But in taking the line that it is for Johnson to deliver the deal he promised, there is room to make reference to his unilateral decision to compress the time available to reach such a deal, if only as a marker for the future. It would sit well within his more general positioning of Johnson as operationally incompetent.
That critique now has real purchase, to the extent of becoming the dominant narrative, because of the way it is being taken up by so many Conservatives and former allies and supporters of the Prime Minister. Just in the last week or so it seems as if a switch has been flicked in this respect, in a way that is remarkable considering he won a majority of eighty less than a year ago. Coronavirus is of course the main driver of that, but I think that the reverberations of the IMB and the ‘breaking international law’ debacle has played its own, not insignificant, role.
On the one hand, it has created a breach between Johnson and some of the hard core Brexiters like Michael Howard. On the other, it has opened up the entire question of competence in a new way for, as Theresa May pointedly asked, “if the consequences of the Withdrawal Agreement were so bad, why did the government sign it”? This in turn links back not just to Johnson but to the arrogance and hubris of his Downing Street operation, for increasingly there are reports of the resentment that experienced MPs and ministers (and, I would assume, senior civil servants) feel about the transparent contempt with which they are treated by the Vote Leave wunderkinds. Bad enough to be subjected to that indignity by those who are competent; intolerable when it comes from those who are serial bunglers.
So, deal or no deal?
All that may well turn out to be bad news for Johnson’s premiership, but it’s not at all clear what it means for the prospects of a trade deal with the EU. That can be argued in two diametrically opposite ways. One is that, stung by the criticism of his failings, making a deal becomes Johnson’s priority so that at least he can claim to have ‘delivered Brexit’, his central policy, in defiance of the ‘doomsters and gloomsters’. The other is that he pushes the button on his no deal threat in order to gain the adulation of the Brexit Ultras and stoke up the populist culture war he thrives on, and once again ignores all of the warnings of just what a disaster that would cause.
Both have very clear risks. Even the thinnest of deals will enrage the Ultras, whilst not avoiding a level of disruption that compounds the narrative of his incompetence. A thicker deal might be a little less disruptive, but enrage them even more. But no deal would be a gift to Labour and, whilst it might appeal to his core vote, the disruption, would, especially on top of the coronavirus suffering, be deeply unpopular. In particular, there is strong polling evidence of how unpopular no deal would be in the ‘Red Wall’ seats.
I’m assuming, of course, that Johnson’s calculation will be based solely upon his own self-interest and advantage, but that’s not an audaciously unrealistic assumption. Where it will lead him, I have no idea and I’ve seen nothing in any of the UK or EU commentary that suggests that anyone else has either. There is certainly no consensus view.
A straw in the wind may be the fairly upbeat report from James Forsyth in The Times, because recently his speculations have had an uncanny knack of proving right, suggesting that he has well-informed sources. But it is perfectly possible – even likely – that Johnson himself doesn’t yet know what he intends. In any case, it should never be forgotten that, as Neale Richmond, the Irish politician who has played a leading role in shaping his country’s response to Brexit, pointedly remarked this week, the negotiations are not an internal Westminster debate, despite what the reporting of some parts of the UK media might suggest.
What is clear, for reasons I’ve argued before, and as trade expert David Henig has argued cogently this week, is that from a UK ‘national interest’ perspective a deal is important. As he says, it’s not that a deal will avoid all the disruption – there will still be plenty of that – but that it would at least begin to re-normalise UK-EU relations. I believe this would also be generally welcomed by the EU.
This is really the next big challenge for the UK, and one which erstwhile remainers can and should try to influence. Sir Simon Fraser, former Permanent Secretary at the Foreign Office, has recently set out the many challenges for post-Brexit foreign policy. They are considerable, because of the strategic incoherence of Brexit. But a key part of meeting them has to be to move UK-EU relations away from the entirely antagonistic framing that Brexiters give them, even after having left. That will be hard enough, but without a deal – even a very limited one – to build on it will be made impossible for years to come.
Clearly that hope is precisely why the scorched earth Brexiters want there to be no deal. For the rest of us it is important they don’t get their way. They have had their Brexit – and what a colossal mess they are making of it – but that does not give them licence to permanently poison our relationship with our closest friends.🔷
Professor Chris Grey, Professor of Organization Studies at Royal Holloway, University of London, and previously a professor at Cambridge University and Warwick University.
Check their Voting Record:
🗳️ Theresa May
🗳️ Michael Gove
🗳️ Keir Starmer