Steve Baker:
The lobby group’s timidity is not equal to the challenge of an ever more dynamic economy
Imade a serious mistake in the course of the referendum campaign. I objected profoundly to Vote Leave’s “CBI – Voice of Brussels” stunt. Now I see the devastation wrought by the Confederation of British Industry’s excessive political influence, I know I was wrong.
Today, the CBI is a grave menace to the political stability and economic prospects of the UK. I choose that term deliberately. When Hayek attacked economists for making the intellectual error of concentrating on superficial short-run effects at the expense of the long-term forces of economic life, he called them “a grave menace to our civilisation”. So it is with the CBI.
The CBI’s influence at the top of government is profound: they can expect a call from the Chancellor after a major speech like Lancaster House. When a CBI member tells me they consider Chequers’ “Common Rule Book” to be one of their great achievements, I believe it.
The voice of business should be heard. Companies are entitled to seek minimal interruption to commerce and, as the party of free enterprise, Conservatives should listen. But the CBI is not that voice. A profound crisis of political economy is unfolding: their conservatism is not equal to the challenge when populism and nationalism – the very forces the EU seeks to suppress – are rising in countries across Europe, with extraordinary monetary policy propping up economies everywhere.
Following the referendum, the Legatum Institute Special Trade Commission brought together trade policy experts from around the world. Their wide-ranging papers made clear what we needed to do to prosper: deliver a multi-pillared approach of pro-competitive, welfare-enhancing reform unilaterally, bilaterally, plurilaterally and multilaterally.
Eventually came the catastrophe of Chequers. Timid and afraid, a terrified Establishment who never understood the demand for independence have clung too close to EU institutions. With Marxists opposite, hungry for power and all the ruin that would bring, the Tory party is riven and a rule-bound EU has inevitably rejected a proposal incompatible with their legal order. This grave threat facing our country is the triumph of the CBI. It is the product of the CBI’s conservatism and willingness to grasp passing expedients. Nationalisation, state planning, tripartite industrial relations, price controls, opposition to sanctions against the USSR, a “bare-knuckle fight” against Thatcherite reform, the ERM, the euro: over the decades, the CBI has been reliably wrong on the big issues of the day.
Thankfully, the trade policy errors into which the blind have led the blind can be brought to an end. We must accept the real choice before us: either exit with nothing agreed or deliver the EU’s broad and deep offer of March. That offer included an advanced FTA covering all sectors, with no tariffs or quantitative restrictions and including services. And under WTO law, new non-tariff barriers would be unlawful.
Tory MPs have published a paper that can unlock the prison into which our negotiations have fallen: the Irish border. And the IEA’s Plan A+ describes the necessary four-pillar approach to comprehensively renew our domestic and international trade policy.
Alan Oxley, former chairman of the General Agreement on Tariffs and Trade, wrote of Chequers: “Clearly those who oversaw preparation of the paper had no basic understanding of the fundamental issues or how to address them.” I have seen that for myself. Within government, our chief trade negotiation adviser, the brilliant Crawford Falconer, has been sidelined. This ludicrous situation must end: our most senior trade negotiator must be put in charge.
Reflecting on the CBI’s support for a “Common Rule Book”, a member told me: “The CBI does great damage to British business by following this and particularly to the thousands of SMEs who are the backbone of our economy.”
The idea of free trade through legal and therefore political harmonisation has run into democracy. People rightly want control of political power, including the blanket of minute regulations that surround business life. We need a voice for business, one that is innovative and optimistic, one that lives in the real world of an increasingly horizontal, dynamic, global and changing economy, not one that is merely reactionary. I look to the rapid establishment of the Alliance of British Entrepreneurs. The voices of the hierarchical, statist past are on notice. A future without them cannot come too soon.