Iain Duncan Smith is a former Secretary of State for Work and Pensions, founded the Centre for Social Justice, and is MP for Chingford and Woodford Green.
The local elections were meant to be a triumph for Labour: indeed, they boasted that they would wipe Conservative councillors off the face of London, and take control of such councils as Westminster and Wandsworth. We Tories were resigned to this outcome, since we have seen it all before. I remember that even Tony Blair’s then seemingly-impregnable government lost thousands of councillors at the same point in the electoral cycle during its first eight years.
Yet in the end it was not to be. Labour failed to make the predicted breakthrough, and the Conservatives, against the odds, held the line in London and actually took back some councils around the country.
Of course, credit should go to the team at CCHQ headed by Brandon Lewis. In contrast to the shambolic campaign of last year, they organised well, and helped ensure that we fought in the right places. However, the importance of better organisation isn’t the only message that we should take from these elections.
Something else emerged from the result which is of great importance. As John Curtice pointed out, we have been reminded that “the electorate that [the Conservative Party] now has is disproportionately a Leave electorate… 70 per cent of the Conservative vote are people that voted Leave…it has to deliver Brexit.”
This is a vital point as we consider the electoral landscape, and understand what the future holds. The Conservative Party is the Brexit Party – and our future is inextricably tied up with whether we indeed deliver Brexit. This can either be a problem – or an opportunity.
It’s a problem if we allow ourselves to make a mess of our departure, and break our own manifesto commitment to leave the Single Market and Customs Union. In such circumstances, the electorate will not forgive us, and we will be punished at the next election. However, leaving the EU is also an opportunity because, if we deliver the Brexit that the public voted for, we will find ourselves in an incredibly strong position.
This was best put to me by a Remain-supporting Labour acquaintance a couple of weeks ago. “If you get Brexit out of the way, having delivered your manifesto commitment,” he said, “you will stand a very good chance of holding on to blue collar voters who are supporting you because of Brexit. Then once it is over, you will then be able to get back some or all of the Remain-supporting middle class, as you remind them of the threats that Jeremy Corbyn poses to the economy, their wellbeing and the security of the country.” Whilst this was said as part of a commentary on the Labour Party, it does I believe sum up the opportunity for the Conservative Party.
Leaving the Customs Union is a vital component of Brexit. Instead of being rule-takers, whilst sitting behind a wall of costly tariffs, the UK will have the opportunity to create a global network of free trade deals with some of the fastest-growing economies in the world. This commitment needs to be implemented in a way which is simple and clear.
Yet even now at this late stage, with only ten months left before we leave the EU, there seems to be confusion in what we want our customs arrangements to be.
This is because the Government has not one but two proposals on the table.
One of them is causing great concern because it would complicate the Brexit process. It is that the UK should commit to what is described as a New Customs Partnership (NCP) with the EU. This would mean aligning the UK to the EU’s customs border. This plan is the result of the EU’s attempt to bully the UK, using the Northern Irish border issue to frustrate the negotiations.
This messy proposal aptly illustrates the way in which we have been conducting the negotiations with the EU. It seems to many that, sadly, as once-firm red lines are abandoned, our negotiators seem too often desperate to please the EU, regardless of the consequences for the UK.
This appears to be the case with the discussions on our post-Brexit customs arrangements. The EU, the Irish government and some in the UK (many in the unelected Lords) cannot accept the result of the referendum, are desperate to force the UK into the Customs Union, and are combining to try and present the Irish border with Northern Ireland as an insurmountable issue.
It is through accepting this reasoning that the government has come up with the New Customs Partnership, (NCP). As a half-way house, the (NCP) option may sound feasible. None the less, it isn’t: it’s ludicrously complex. Indeed, it would create significant administrative and regulatory problems for business and government, and does not resolve the issue of the border.
Even Nick Macpherson, an arch-Remainer and a former Treasury Permanent Secretary, tweeted recently: “I fear it is neither negotiable nor implementable.” Yet, despite the crucial Cabinet sub-committee on Brexit negotiations and strategy deciding last week that the scheme isn’t fit for purpose, some in Downing Street are, incredibly, now briefing out that after a few tweaks it can be presented again.
Under the NCP proposal, the UK would continue to set the EU’s tariff rates – with the mind-blowing additional complexity of figuring out whether the final destination of the goods concerned is the UK domestic market or the EU.
Complicated, byzantine and difficult to operate, the costs of this arrangement are impossible to calculate. If this isn’t problematic enough, the proposal would entail a customs rebate mechanism. Taking into account people and business’s experience of the time it takes the tax office to make any refund, it could take a very long time to get money returned – and businesses would face the upfront costs.
And as if there wasn’t enough complication in the scheme already, businesses would have to track their goods along their supply chain in order to qualify for the payment. Yet any self-respecting importing business would probably not want to disclose the end user of goods, because they would worry that others could exploit this information – and sell straight to their end user.
But the problems with NCP aren’t just about charges at the border. For the imported goods concerned would also have to meet the EU’s raft of regulatory requirements – the same job-destroying, cost-increasing regulations which have bound businesses in red tape for years, and which people voted to be rid of in the referendum.
The sum of all of this is that the NCP would be the same as a full customs union in all but name – particularly since the UK would remain a tax collector for the EU, and make substantial net contributions to the EU budget, over and above what is already agreed.
In simple terms, this arrangement would run the risk of destroying the great prize of Brexit – namely, the ability of the UK to strike trade deals with the rest of the world. After all, why would non-EU countries bother to enter into trade deals with the UK if UK exporters were be able to export goods to their countries tariff-free…while their own exporters had to pay the EU tariff, and meet the complex EU regulations, before asking for a rebate?
Already, Wilbur Ross, the US Commerce Secretary, Julie Bishop, Australia’s Foreign Minister, have both warned that, without the UK being able to diverge from EU regulations, neither country will be able to sign a free trade agreement with the UK.
Why then, I wonder, with only a short time left before we leave the EU, are we still discussing this option when a viable alternative has been in existence from the outset?
This is the maximum facilitation or so-called Maxfac plan. It seeks to ensure that we commit to a highly streamlined customs arrangement between the UK and the EU – simplifying requirements and leaving us able to strike trade deals without charging EU tariffs or forcing companies to comply with EU regulations, whether or not the goods are going on to the EU. Instead of wasting time and effort on the NCP, which is far too complex, the Government should now focus all its efforts on the Maxfac proposal, and forge a delivery plan for it.
Reports in the media last week led us to believe that the Cabinet subcommittee agreed to take the NCP off the table and concentrate on Maxfac. However, I understand that some in Downing Street have been briefing against the outcome of the meeting, and plan to keep both options on the table. This would be a grave mistake. It would dilute the work of the civil service, and ensure we do not carry out the practical work to deliver a coherent plan.
I do not believe that I am alone in my concern that during these negotiations we have allowed ourselves to be trapped in a timeline set by the EU. It has imposed unreal restrictions on the negotiations on us, and opened us up to the spectacle of the EU dictating what they want on a take it or leave it basis. They have been allowed to do so because, too often, we have wasted time trying to satisfy all their demands.
However, following the results of the elections on Thursday, we should feel rejuvenated, as a Party and as a governent, by the clarity of the message that the voters sent to us, which was simple. It is that we, as a party of government, need to ensure that we deliver Brexit. That means giving business and people clarity on our future relationship with the EU. Any messy and unworkable ideas should now be binned, and our negotiators should tell the EU that we need to get on with the trade deal before we leave – or everything else, including the payments negotiated, are going to be in jeopardy.
In 2016, the British people voted to leave the EU, and take back control of our borders, our laws and our money. The Conservative Government should remember we were elected to deliver this. It’s time to forget the NCP and get on with delivering what they voted for.