Henry Newman is Director of Open Europe.
Just when it looked as though there was broad agreement within the Cabinet and Conservative Party on Brexit policy, and attention was focused on what the Prime Minister ought to say in Friday’s coming speech in Florence, Boris Johnson made a startling intervention. In a 4000 word article, the Foreign Secretary laid out his vision for a “bold, thriving Britain”. It was above all a rejection (at least implicitly) of the way in which the Government has treated Brexit as a bomb that needs defusing, rather than as a mandate for change, and an opportunity to remake the nation for the better.
Johnson’s article has been interpreted in various ways: as a rejection of the Government’s plans for a two or three year transition period during which we would continue to make large contributions to the EU; as a re-enactment of Vote Leave’s (controversial) claims about £350 million a week; and – inevitably – as a leadership bid. The policy significance of Johnson’s intervention is that it calls into question any sort of stand-still transition.
The major development over the last half year in the Government’s Brexit plans has been the informal Cabinet agreement in favour of a transition, which Philip Hammond is understood to have brokered. Details of this transition were expected to be at the heart of the Prime Minister’s Florence Speech.
With hindsight, a transition might have been avoided if we had delayed triggering Article 50 and/or spent more time and effort making preparations for Brexit. But, to quote a tautological phrase favoured by phlegmatic civil servants, “we are where we are”. At this point, a transition period seems all but inevitable to minimise disruption. The Foreign Secretary’s article has been interpreted as a rejection of any transition beyond just a few months (although some suggest he may be open to a longer period).
My concern is that, rather than arguing about the ideal transition, we should be addressing a prior question. Quite simply: what sort of country do we want Britain to be after any transition period? Before the referendum, Open Europe examined possible scenarios for the UK in the event of both a vote to Leave and to Remain. We found that both paths could be good or bad for the UK, and that the most important thing was not the decision to leave itself, but what the Government does next. And herein lies the problem.
I’ve spoken to dozens of senior officials, ministers and advisers. None have disagreed with my fundamental concern: that the Government has not yet decided what sort of country we ought to be after Brexit. There is a range of possibilities – from Norway’s EEA/EFTA relationship to Switzerland’s web of bilateral agreements and to a Canada-type Free Trade Agreement. Where should the UK land on this spectrum from Norway/Switzerland to Canada? Or, in the jargon preferred by Whitehall – do we go for a “high access, low control” or “low access, high control”? Each scenario has benefits as well as disadvantages.
What we do know is that the Government has ruled out the exact same relationship as Norway or Switzerland: the Lancaster House Speech made clear that we would leave the Single Market. And that hasn’t changed. The Treasury, however, seems to favour a position that leaves us just outside of the Single Market – the so-called “EEA minus” position. Their proposal would entail locking the UK in a regulatory ERM. We would technically be outside the EU and its Single Market, without a seat around the table or ability directly to shape regulations, but bound to implement all the EU’s rules and regulations anyway, other than if we made special pleading in a few exceptional cases.
The Treasury is inexorably pushing Whitehall towards a Brexit that would limit our chances of ever seizing new opportunities outside the EU. It’s almost as if their aim is to prove Jean-Claude Juncker right – to show that Britain would have a worse deal outside the EU than we do inside. But there is an alternative: placing Britain further towards the centre of the spectrum between Norway/Switzerland and Canada. This would ensure the UK’s right to regulate our markets, and still leave the possibility of opting to adopt some of Europe’s regulations. Ministers need to be candid about the costs of such an approach, but also open to its potential benefits.
The Government has taken too long to face up to the fundamental question before us. From speaking to civil servants, it seems that – at least until recently – the Cabinet has not yet properly considered either a preferred end state or indeed transition policy. If the rumours are true that David Davis only saw the Lancaster House Speech and Article 50 letter at the very last minute, it’s no wonder that ministers like Johnson, who have been even further away from decision making, feel frustrated.
I have written previously for this site about the revival of the Treasury as a key power in the Cabinet. I welcomed it, even if I didn’t and don’t agree with all of Philip Hammond’s outlook. By contrast, it’s been depressing to watch the continuing sidelining of the Foreign Office over the past year and a bit. Whether the Departments for Exiting the EU, and of International Trade, were deliberately created to weaken the FCO, that is the effect they have had. For Government policy to work effectively, the FCO needs a seat at the very top table. Given the profound challenges thrown up by Brexit, it’s even more imperative that the Foreign Office plays the fullest role. Rather than letting decisions be made by a narrow coterie in the centre, the whole Cabinet needs to be consulted, with issues frankly debated and agreed collectively. So I suspect that many within government, even if they don’t agree with Boris Johnson, will be somehow pleased that the department is punching at its weight again.