The grave mistake
ON A COUNTER-FACTUAL ‘WHAT-IF? MOMENT’ THAT COULD HAVE STOPPED BREXIT AT BIRTH
What’s been the most important political news of the week? Certainly not Philip Hammond’s budget gamble, whose modest retreat from nearly a decade of austerity rests on the fragile proviso that Britain will achieve a Brexit deal with the EU27. Not for the first time, the chancellor’s caveat is contradicted by No 10. The week’s big headline wasn’t the
50p Brexit commemorative coin either, let alone Lord Alan (“You’re Fired”) Sugar’s Brexit confession in the House of Lords, poignantly egotistical though it was.
We’ll come back to Lord Sugar and the peers’ impassioned debate on a second referendum. More in the spirit of the times, alas, was Sunday’s election of a populist demagogue and Trump fan to lead an important country – in this case Brazil. Like state-sponsored political assassinations, like pipe bombs and synagogue shootings in America, that’s fast becoming the new normal: sugar rush politics (no pun intended, M’lord) by a sugar rush soft-drink addict in the White House.
No, for my money the most significant political event flagged up this week was at the other end of the sugar rush spectrum. Low sugar Angela Merkel is stepping down.
Steady on, Mike. Why should the German chancellor’s Blair-like announcement – it came after a bad result for Berlin’s CDU-SPD coalition in state elections in Hesse – that she won’t fight the next general election, scheduled for 2021, matter to us? Cautious Mutti – Mum – Merkel has hardly been flexible, let alone helpful, to Britain, either in the run-up to the June 23 Brexit referendum or during the chaotic negotiations since.
No, but she might be more helpful in the coming crunch when the EU27’S leaders – that mostly means Merkel – take over from Michel Barnier’s talking clock to decide what sort of deal they are prepared to cut with that other dutiful clergyman’s dutiful daughter, Theresa May. That now looks less possible.
Don’t believe the ‘dignified exit’ stuff. By unexpectedly announcing she is preparing to step down as party leader and chancellor after four terms Merkel may have wrong-footed her wannabe successors. But, like Tony Blair in autumn 2004, she has also opted for lame duck status and is unlikely to last long. “Mutti is Kaputti” as bone-headed Tory Brexiteer, Andrew Bridgen, sensitively tweeted.
Berlin’s Grand Coalition may be kaputti too if the flagging SPD (almost beaten by the Greens in Hesse) have any residual sense of self- preservation. In Hesse – home of Frankfurt, Germany’s and the eurozone’s financial hub – Merkel’s CDU were in improbable coalition with the middle class, leftish Greens. They may now have to bring in the pro-market FDP to survive. What happens next in Berlin is even less clear. Europe rightly trembles.
Any time from here on, it means no more Mutti, dull but reassuringly sensible, essentially decent. Since 2005 she has been Europe’s sheet-anchor, more recently a counterpoint to Donald Trump’s demolition job on the institutions which have upheld peace, (mostly) stability and decent government in the industrial West since 1945. It was a model we thought until recently we had been successfully exporting south and east since the fall of the Berlin Wall in 1989. How naïve we were!
In this context the loveless political marriage of Theresa May and Philip Hammond – contemporaries at Oxford in the 1970s – suddenly looks more solid than we tend to think. Spain, Italy, embattled Greece, much of the old Eastern bloc, even Sweden, are all politically shaky. So is May, of course, but she is lucky in her enemies on both left and right, Jeremy Corbyn and Boris, the portly plotter.
Lucky too in her allies. Eeyore Hammond (“Phil-good Factor” according to the newly upbeat Daily Mail 2.0) was openly abused by May aides like silly brainbox Nick Timothy before their doomed 2017 election. Hammond emerged stronger. What’s more, he doesn’t want her job, whatever the Spectator tells its readers.
So what are the Brexit takeaways from the budget, apart from the obvious? Politics has trumped economics as May responds to public austerity fatigue and the need to meet some of Labour’s easier challenges – despite the Treasury’s resistance. £103 billion put into a £2.2 trillion economy over five years won’t feel like winning the pools, especially for the poorest families, as the Resolution Foundation beat the Institute for Fiscal Studies (IFS) in sternly pointing out. Austerity hasn’t ended, as the PM promised, but it is taking a nap while the Treasury gambles that something turns up.
So the budget generated positive headlines from supportive papers because the horribly cheerful Hammond – those cringemaking jokes, had someone spiked his water? – had carefully pandered to vociferous Tory MPS and interest groups. The “little extras” encompassed the motoring and beer lobbies, families, tax-cutters and rural broadband protesters. The Mail’s campaigns (always a good move) on the beleaguered high street’s business rates, gambling, plastic, social care, defence, even potholes which notoriously “externalise” the cost from the roads budget to drivers whose cars get damaged, their boxes were all ticked. Income tax rises? Never heard of them.
But they’ll be back.
Housing shortages, classroom shortages, embattled town halls and firsttime buyers weren’t quite forgotten. Universal credit was patched up (again). And the artiste formerly known as Fiscal Phil put a few bob the way of mental health in the larger context of the £20 billion a year (3.4% in real terms) which headline thief May had already announced for the NHS. He also threatened Amazon and other FAANG tax cheats with a digital tax – “very brave, minister,” Sir Humphrey probably told him, because it will only work if the rest of the world does too.
Budgets which do well (‘Tax Bills Slashed’, ‘High St Bonanza’ etc) on day one often quickly fall apart. This one was a very modest sugar rush. But though he uttered the word “Brexit” only once and promised a “double deal dividend” once the uncertainty is over, Feel-good Phil made clear – unlike May – what the likely fall-apart scenario is: a no-deal departure on March 29. She says the extra spending will be there anyway (shades of May’s “nothing has changed” talk in 2017?), he says it won’t. He’s right.
There were glancing hints of a major review of Britain’s economic strategy which sounded like a revival of his “deregulated Singapore” warning, but probably wasn’t. In reality it would probably mean a full-scale budget revision next year – George Osborne’s Brexit emergency budget at last? – with cuts and higher taxes if things go badly wrong, as assorted business predictions are saying in EVER LOUDER TONES.
The chancellor has spent most of the higher-than-expected tax receipts which the usually-gloomy Office of Budget Responsibility (OBR) obligingly found down back of the Treasury sofa – but not all of it. The cost of Brexit preparation has now reached £4.2 billion, MPS were told. It’s money that won’t go on the NHS, Boris, it will go on UK Plc’s credit card instead.
All the same, Hammond says he has kept £15 billion of reserve “fire power” or “fiscal headroom” in case the economy needs a boost as lorries back up at Dover and Calais. It’s all funny money anyway and the Office for Budget Responsibility – which often gets its own sums wrong – complained that late budget changes meant it hadn’t had time to vet all the chancellor’s claims on Monday.
Fiscal conservatives, those who want him to complete Osborne’s much-delayed goal of eliminating the budget deficit, were quietly aghast. The national debt has finally peaked at 86% of GDP, but that’s double the percentage it was before the bankers’ crash. There are few such traditional Tories left on the Conservative benches though, certainly not among the hard Brexit right whose votes (abstentions at the very least) Tess and Phil will need to get their still-uncertain deal through the Commons. The Tree-grown Theory of Money is no longer confined to the Corbynistas.
You will have spotted that excited talk of coups against May or the sacking of Hammond have gone as quiet as the “Brexit will deliver a glorious future” chorus. A snap election? You must be joking. In contrast to which I must draw your attention to that little-reported Lords debate on the need for a second referendum – the People’s Vote campaign – on Brexit in the wake of the 700,000-strong march through London which The New European celebrated over several pages.
I need hardly tell you that peers who spoke were overwhelmingly in favour of giving the electorate a chance to think again and change their minds over this momentous decision. Or that members of the Lords are by no means a cross-section of British society, though Lord John Kerr – former ambassador to Washington and the EU, ex-head of the foreign office – did cite polls which suggest that 45% of voters now want a second vote against 35% who don’t. Only 20% think May is handling Brexit well.
This is the forum where Lord Sugar, the Amstrad billionaire and Trump-like television celebrity host of The Apprentice, made his Brexit confession. But first, the debate. It was initiated by a Liberal Democrat called Lord Campbell of Pittenweem (it’s a pretty fishing village in Fife) who turns out to be Menzies ‘Ming’ Campbell, Pittenweem’s former MP and one of the nicest people in politics as well as the (former) fastest runner in Europe.
It was Lord Ming who gently reminded his listeners of the “facile misunderstandings” that had led David Davis to say “there will be no downside to Brexit” and Liam Fox to predict that the UK’S FTA with the EU 27 “should be one of the easiest in human history”. A century after the Armistice they should have remembered that Europe is as much about security as economics and that it is Angela Merkel’s sense of responsibility to the
EU’S ‘four freedoms’ – goods, people, capital and services – that accounts for her inflexibility in the Brexit talks. She fears others may be tempted to follow.
There is some truth in that, as there was
in much of what Pittenweem’s ex-mp said about the economic, social and constitutional damage Britain may be about to inflict upon itself. Parliament is sovereign and can change its mind. The people should be allowed to pass judgement on whatever May brings home from Brussels. Interestingly, few of the few who spoke against him – Norman Lamont and Michael Forsyth to the fore – spoke of the glorious post-brexit future, but concentrated on the well-known objections, practical as well as those of principle, to another referendum.
New European readers would have been proud of their columnist, the indefatigable Andrew Adonis’s pithy contribution. In just three minutes and 394 words he set out his nine-point case for a People’s Vote. You can find it in the online Lords Hansard, October 25, column 977, but let me summarise his summary: a suspension of Article 50 so we can hold a referendum in May; the suspension of current referendum laws to allow a dedicated act and commission to supervise it;
“probably” a two-choice option – May’s deal or Remain – because there is a no-deal third option in reality (planes must fly etc); only one properly regulated and accountable campaign per side; properly regulated social media, including funding; votes for 16- and 17-year-olds; and a ballot during term time so that students – the future – can vote easily.
I’m sure you can spot contentious points in that package. Some peers did, including those who (like me) feel there would have to be three options – May’s deal, no-deal or Remain – with a second preference mechanism to ensure a majority. Someone asked if that meant trying to overturn the 2016 referendum result – in the best EU tradition – by means of the very alternative vote system rejected in the 2011 referendum on electoral reform. Oh dear, what a can of worms!
If that was not enough Lord Trevethin, an elected (sic) hereditary peer and QC, called the Adonis timetable “hopelessly optimistic” and his plan for a bespoke supervisory body as likely to arouse suspicion. Trevethin had read both the Better for Britain Road Map study and the UCL Constitution Unit’s report, which are both online. While the Road Map is partisan (of course) the UCL study is politically neutral but technically expert.
It says a referendum is possible and should be a serious option. But it would need at least 22 weeks to prepare and must be scrupulous to command respect on both sides. Who knows what might happen. ‘Norway for Now’ is back as a possible transitional mechanism, sponsored by Nick Boles, a bagman for Michael Gove, the Rascal to Watch. But is it back in Norway – or in Brussels? No one knows anything for certain. But the People’s Vote is also in contention, as it was not a year ago, as the negotiations stumble near the cliff edge and the chancellor bribes voters with borrowed money.
What definitely didn’t happen is where Lord Sugar’s comes into the story.
In his brief contribution he said he opposes a second referendum (“a complete farce”) while simultaneously asserting – as an experienced chairman of public companies – that directors could have gone to jail if they misled shareholders as the Brexit camp did voters. So it would be better to declare the 2016 vote null and void – and vote on May’s deal with more knowledge than we all had then.
Oh dear again. But here’s the killer detail. People vaguely remember that Lord Sugar did a television ad for Stronger in Europe, along with Stephen Hawking and Shami Chakrabarti. But Sugar reminded any peer who did not already know that on the eve of the BBC EU Referendum: The Great Debate, David Cameron had also asked him to take on Boris (“Most Trusted”) Johnson who was appearing for the Leave side. “To this day, I kick myself for turning it down,” he confessed.
At the time he feared he didn’t have sufficient grasp of the intricate details (don’t worry, Alan, nor did Boris), but when he watched London mayor, Sadiq Khan doing his inadequate best, Sugar realised that “my forceful manner” would have forced Johnson to admit he was lying about that weekly £350 million for the NHS – and possibly swung the narrow outcome the other way.
It’s a great ‘what if ’ counter-factual. But I could easily be persuaded he’s right. The Remain camp lacked a street-smart bruiser’s edge, so evident on the other side. Sugar, the council house boy from Hackney who left school at 16 and made a fortune the hard way, was just the man to puncture the over-educated Etonian’s blustering evasions live on telly.
It would have been a Trump political moment, but in a better cause than Trump usually manages – a Sugar rush we could have sat at home and cheered.
REGRET: Lord Alan Sugar