PM’S soft Brexit plan scuttled as Barnier takes hard line on customs
At least Corbyn recognises the appetite for change, even if what he offers is a delusional nonsense
MICHEL BARNIER effectively killed off Theresa May’s customs plan in Brussels yesterday as he said that the European Union would never accept British officials collecting duties on its behalf after Brexit.
The EU’S chief Brexit negotiator refused to accept that Britain had “evolved its position” and offered no concessions in return for the Prime Minister’s soft Brexit plan, which led to the resignations of David Davis as negotiator and Boris Johnson as foreign secretary.
Instead, he said that the UK could still join “a customs union”, which would mean Britain could not make its own trade deals after Brexit – a move described as “unacceptable” by Brexiteers.
Mrs May’s White Paper calls for Britain to sign up to a common rule book and customs arrangements with Brussels as if the UK and EU were part of the same customs territory. British customs officials would collect duties on goods imported to the UK but destined for the EU, under the plan. “The EU cannot and the EU will not delegate the application of its customs policy, of its rules, VAT and excise duty collections to a nonmember who would not be subject to EU governance structures,” Mr Barnier said after meeting Dominic Raab, the new Brexit Secretary, in Brussels.
“The UK wants to take back control of its money, law and borders. We will respect that. But the EU also wants to keep controls of its money, law and borders. And the UK should respect that,” he added. “We have designed our proposals both to respect the result of the referendum, and the core principles of the EU.” Mr Raab, who admitted the plans were subject to negotiation, told reporters: “Those plans are ambitious, principled and pragmatic.”
Mrs May is dispatching ministers around Europe to try to win support for the plan, but Mr Barnier said: “Anyone who wants to find a sliver of difference between my mandate and what the heads of government say they want are wasting their time, quite frankly”.
Priti Patel MP, who was sacked from the Cabinet by Mrs May, said on Twitter that Tories must “respect the voices, views and opinions” of party volunteers after a Conservative association accused the Prime Minister of betraying Brexit with her plan.
Steve Baker, a former Brexit minister, said: “On this path, eventually, we will reach a fork in the road between final capitulation or exit with no agreement.”
The EU rejection has thrown renewed attention on to the issue of the Irish border. Mr Raab said that any backstop to prevent the Irish border should be “time-limited”. That was contradicted by Mr Barnier, who said any backstop must be “all weather”.
He added: “It is Brexit that has created this problem between Ireland and Northern Ireland which does risk the Good Friday Agreement.”
Mr Barnier also ruled out the EU accepting UK efforts to make payment of the £39billion Brexit bill conditional on a trade deal. Mr Raab renewed his call for the two issues to be linked.
Amid the incessant rowing over what kind of Brexit we should be pursuing, an equally important, interrelated question – what kind of economy do we want? – seems to have been almost entirely forgotten. On becoming premier, Theresa May spoke of the “burning injustices” of British society, and her heart went out to the “ordinary working-class families” who “just about manage”. Standing in front of No 10, she promised that “the Government I lead will not be driven by the interests of the privileged few but by yours”. Her remarks seemed to recognise that Brexit was more than just a vote to leave the EU. It was a scream of anger, a great venting of pent-up frustrations with our economy and politics. Above all, it was a vote for change, however ill-defined that aspiration might be.
Fast forward two years, and what’s been done to answer these simmering discontents? Nothing. Quite the reverse. Rather than articulating a strategy that might address the “burning injustices”, May’s whole approach to Brexit is instructed by a desire to preserve as much of the economic status quo as possible, commensurate with honouring her increasingly compromised “red lines”.
She seeks to stay in the single market for manufacturing and agricultural produce, thereby seemingly locking in Britain’s yawning deficit with the rest of the EU in traded goods, and she demands “enhanced equivalence” for financial services so as to preserve as much of their access to EU markets as possible. Brussels will bite her hand off to accept the former, but sensing an opportunity for a land-grab, will vigorously refuse the latter. The way things are going, we’ll end up with a diminished form of the economic model we already have. Nobody voted for that.
In defence of the status quo, it might be said that it doesn’t seem to be working too badly. Unemployment is close to an all-time low, and labour market participation at an all-time high. Public finances are on a steadily improving trend, and after a near 10-year hiatus, real wage growth has finally returned.
But beneath the veneer, the root cause of Britain’s distress is all too obvious – too many people scratching a living in rubbish, low-wage, lowproductivity, dead-end jobs, and the all-too evident social alienation that goes with such a dispiriting state of affairs.
We are, moreover, an economy addicted to consumption, spending like drunken sailors regardless of means. Analysis published by the Office for National Statistics this week shows that, for the first time since the Lawson boom of the late 1980s, households as a whole saw their outgoings last year exceed their income, with the difference made up by eating into savings or borrowing.
Cheap debt is the new opium of the people, providing the funds to sustain a habit unsupported by our earnings power. What economic prosperity we enjoy is a mirage, founded on a sea of unsustainable, debt-fuelled retail therapy. The financial crisis should have acted as a catalyst for change; but we have carried on much as before, doubling down on the credit card in the hope that, like Mr Micawber, something will eventually turn up.
Areas that voted most heavily for Brexit are strongly correlated with regions that have a high preponderance of unskilled employment. It is incumbent on those who claim that leaving the EU is going to be an economic disaster to first explain how staying in is going to help these nothing-to-lose left-behinds. Answer comes there none.
In a pamphlet for Policy Exchange this week, the Left-leaning Cambridge academic and Brexit supporter Christopher Bickerton argues that EU membership has not just failed to help such people, but has greatly exacerbated their situation. The assumption that there is no reasonable economic basis for wishing the UK to exit the single market, he contends, ignores the way the EU’S rules on the free movement of people have interacted negatively with the UK’S consumption-led, flexible labour market growth model.
“Getting employers to invest in training is difficult even with large skill shortages and an overheating labour market. With access to an almost unlimited supply of labour, it has proven an impossible task,” Bickerton argues. Employers routinely choose cheap labour over productivity-enhancing investment, and when they need skills, are all too likely to ship them in from overseas.
Since the turn of the century, investment in training has fallen a follow Jeremy Warner on Twitter @jeremywarneruk; read more at telegraph.co.uk/ opinion further 15 per cent, even as the size of the labour force has ballooned. The apprenticeship levy has proved an abject failure; much of the money raised has been left unspent, and where it is applied, it is as likely to fund MBAS for managers as skills for school leavers.
You don’t have to accept all of Bickerton’s remedies – currency devaluation scarcely seems likely to help much in the long term – to agree with his diagnosis. For the UK, membership of the single market seems to have entrenched unsustainable consumption and under-investment. Leaving won’t of itself bring about the desired rebalancing to more productive forms of growth, but by shaking things up politically and economically, it does provide an opportunity for change.
The Brexit debate is mired in increasingly arcane arguments about our future relationship with the EU. It needs urgently to reconnect with the discontents that prompted the vote for Brexit in the first place. Restoring their sense of economic self worth is the political challenge of our age.
Into the void steps Jeremy Corbyn with a kind of poor man’s Trumpism
– a wholly unrealistic vision for recreating British manufacturing, where horny-handed men of toil proudly work their lathes for the good of humanity. But at least he recognises the appetite for change, even if what he offers is a delusional nonsense.
It is sometimes said that the party that delivers Brexit will be finished for a generation, such is its capacity to disappoint. This needn’t necessarily be true, but to make Brexit into merely a damage limitation exercise, as now seems to be the case, fails to acknowledge the meaning of Brexit and pretty much guarantees it.