Lord Hannan of Kingsclere is a Tory peer, writer and columnist. He was a Conservative MEP from 1999 to 2020 and is now Chairman of the Free Trade Initiative.
On Monday I picked up the new government newspaper, The benefits of Brexit: how the UK benefits from leaving the EU, hoping to be comforted. The purpose of leaving the EU, after all, was to remove constraints, allowing us to make different and better choices. Two years after Brexit, and one year after the end of the transition, where are we?
Overall, I’m afraid, the document is a thin, watery, tasteless gruel. Yes, there are tasty morsels here and there. Replacing the Common Agricultural Policy with a subsidy scheme that rewards rural management rather than food production is in the interests of farmers, consumers and the countryside.
Regaining control of our fishing grounds is also in the interest of fishermen and fish. We’ve taken a few irritating pebbles out of our shoes – the tampon tax, EU passports, restrictions on imperial measurements.
But most of the gains listed here are ambitious. Yes, we might have a better alternative to GDPR rules. Yes, we could be the world leader in AI. Yes, we could be more open to trade. Yes, we could remove the most burdensome aspects of Solvency II, MiFID II and the rest of the EU financial services apparatus. But, so far, we haven’t.
Here are 100 pages of officials. I don’t just mean that the document was literally written by officials; I mean his view of the world is that of Whitehall. Time and time again, we see items such as a new regulatory regime, a new agency or a new subsidy mechanism in the list of “wins”. The idea that leaving the EU could mean fewer regulations – a major theme of Vote Leave, which went into great detail in its million-word manifesto Change or gowas forgotten.
Any talk of cheaper energy is gone. It is now clear that outside the EU Britain will go beyond what it was obliged to do as a member. The same goes for any notion of a less rigid labor market: BEIS has stopped even moderate plans to apply the Working Time Directive in the more flexible way than many EU members do.
Regulations that met with universal opposition when imposed are left in place because existing producers, having internalized the costs of compliance, do not want new entrants to avoid them. The idea that government should act in the interest of the nation as a whole, making things cheaper for consumers and thereby stimulating growth, has been sacrificed to the public service’s obsession with groups of privileged customers – or, as they are called in the jargon, “stakeholders”.
Why is a government elected to achieve Brexit so timid? Is it Boris Johnson’s fault? Should we blame his ministers? Or the Blob? Let’s consider the options.
A common accusation leveled at the prime minister is that he lacks stamina, throwing out dazzling ideas only to back down when he realizes they imply short-term unpopularity. Even when popular, the argument goes, he often ignores them, leaving them to sink in the quicksand of Whitehall inertia.
Obviously, some of that happened here. For example, the Trade Remedies Authority, set up to assess whether existing tariffs or other barriers could be justified, issued its first judgment on steel duties that Brussels imposed in retaliation against Donald Trump. He called for the repeal of most of them.
The Prime Minister canceled it, apparently at the request of some MPs from steel constituencies. Having made the best defense of free trade by any major leader as recently as February 2020, he therefore now has a record of 100% interventions in a protectionist direction. Indeed, protectionism is suddenly presented as an advantage of Brexit: “We have created the Trade Remedies Authority to help defend the economic interests of the United Kingdom by investigating complaints from British industries.
Britain’s approach to trade has been almost as prone to producer capture as that of the EU. Even against such willing countries as Australia and New Zealand, we dragged our feet (almost all the delays were on the UK side). How much more mercantilist will we be when it comes to India or Mexico?
Again, the more specific the problems, the harder it is to blame them all on number 10. The government brags about freeports, for example – and it’s certainly true that freeports can create growth of a way that was illegal in the EU. But only if they have significant powers, especially when it comes to reducing or eliminating taxes – something Treasury officials appear to have blocked.
Brexit has given us the opportunity to set aside some of the EU’s more Luddite gene-editing rules. Again, the intentions seemed to be there. Ministers fought the Blob to get Matt Ridley appointed to the relevant advisory committee, which duly proposed sensible ways to seize economic and environmental opportunities. Nothing happened. After repeatedly trying to turn his recommendations into policy, Ridley quit politics – a real loss to the nation.
Most disappointing of all has been the failure to deregulate financial services. While we were in the EU, we voted against several unnecessary new rules, some of which seemed expressly designed to direct business from London to Paris and Frankfurt. Often we lost. But, now that we are free to repeal these laws, we seem reluctant to do so – even if, by denying us equivalence, the EU has removed any incentive to meet its standards.
Every time you push them, the treasury ministers say it’s all in hand, they’re doing a review and whatever and mimblewimble. But, more than two years after winning an 80-seat majority, the government has done nothing. Indeed, there is a real prospect that the EU will remove the most restrictive aspects of the Solvency II regime before Britain.
I’m afraid ministers have to accept collective responsibility here. In theory, they want deregulation. In practice, they don’t want it in their own services. And they don’t want to because change — especially change that pits them against their officials — is hard work and leads to bad short-term headlines.
Which brings us to the real problem. The only way to implement an economically liberal agenda is to tackle the Blob – not just the civil servants and quangos, but all the associated corporatists, rent seekers and CBI bureaucrats who have clung to the status quo. . This takes not only courage, but also time, patience and determination.
Dominic Cummings was reportedly brought in to get the better of the Blob. He failed. Perhaps he was better at posing the problem than at approaching it. Maybe he lacked support. Perhaps he was overtaken by the coronavirus. Whatever the explanation, I’m afraid the moment has passed.
How telling that this administration – this supposedly Brexit-focused, anti-nanny-state, freedom-loving administration – has abandoned the one-in-one rule on regulations followed by David Cameron and Theresa May. Apparently it was deemed incompatible with the net zero agenda.
We paid a high price in the exit negotiations for the right to deviate from EU standards. I was one of those who argued for moderation – to agree to a Swiss-style deal to avoid many of the wranglings we faced over Northern Ireland.
I lost this argument and we opted for absolute regulatory freedom. OK, fine: I’m happy to follow the program. But it’s silly to pay this price and then not using the freedoms he bought. There was a time when almost all Conservative MPs understood that. Where did they all go?