Rupert Darwall

The toxic politics of ‘soft Brexit’

The toxic politics of 'soft Brexit'
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The management principle that in static organisations, people are promoted to their level of incompetence reveals the government’s two most inept politicians to be the Prime Minister and the Chancellor of the Exchequer.

Appearing at Davos last week, Philip Hammond pitched the government into its current – conceivably terminal – Brexit crisis. Thanks to his intervention, the Chancellor’s game plan is now obvious: the softest possible Brexit. Getting away with it involves a softly, softly approach. The politics of being outside the EU but ruled by the EU as a de facto Brussels protectorate require copious doses of political Temazepam. This, one would have thought, would have come naturally to Philip Hammond. Keep the Brexit game plan under the tightest of wraps and spring it at the very last moment, when the only other option is crashing out of the EU with no deal. Instead the Chancellor went to Davos, criticised the Prime Minister and the Foreign Secretary and gave a speech in praise of the Remainer CBI and its preference for a minimal Brexit. It was singularly stupid.

A politically astute politician would have understood that robust public debate will kill an ultra-soft Brexit. He would have sent his audience to sleep and given the media nothing to report. Instead the Chancellor guaranteed there will be a debate. It will expose the fundamental dishonesty of the Chancellor’s position. If the end-state is minimal change from the status quo, what is the point of the so-called transition period?  EU-minus – essentially the UK shorn of all its decision-making representation in Brussels – does not require a transition period. It is a transparent con.

The politics of Soft Brexit become yet more toxic when its principal commercial rationale becomes clear – preserving the City’s ‘access’ to the Single Market. The Government is already signalling that it is prepared to concede British taxpayers making continuous contributions to the EU budget to subsidise American investment banks’ activities in the City. If the City were expected to fund these payments itself, it would run a mile, so the government’s answer will be to stick it to ordinary taxpayers.

The softening-up exercise continued with the leak of a Whitehall assessment purporting to show the cost of various Brexit options. This debased policy gimmick suffers from a crucial flaw. Brexit frees Britain from the legal requirement to follow economically damaging EU policies. Yet the analysis assumes all domestic policy settings mandated by EU regulations remain unchanged. Insofar as the modelling has any value, it is to provide the government with a scorecard of what it needs to do to ensure that Britain comes out ahead economically. This, of course, is the last thing the Chancellor has in mind. Indeed the physical logic of the Treasury’s gravity model of trade is to turn Britain into an impotent economic and political satellite of the EU, a lifeless moon orbiting planet EU.

It doesn’t take a political genius to work out how all this will play out at the next election. The 52 percent who voted Leave didn’t do so to have the UK made formally subservient to Brussels. Objective Remainers, notably former EU commissioner Lord Hill, recognise that the loss of British representation and influence in Brussels fundamentally changes the calculus of Britain’s optimal relationship with the EU.

The cravenness of both the Prime Minister and the Chancellor of the Exchequer is in framing the problem of one of the City’s ‘access’ to the Single Market rather than seeking every possible way to enhance its competitiveness. So long as the City is the best place in the European timezone to transact financial services, talent and customers will come. Instead of begging Brussels to preserve City access, ministers should develop a pro-competitive agenda and undo the absurd regulatory over-reaction to the 2008 financial crisis that spawned a mass of damaging regulation, starting with dumping the monstrous MIFID II regulation of financial markets the moment Britain leaves the EU.

Thanks to her Chancellor, there will now be the public debate on what Brexit means. The trade secretary Liam Fox argues that Brexiteers should swallow their disappointment as there aren’t the votes in the House of Commons for a clean Brexit. Inadvertently Dr. Fox has highlighted why the Prime Minister cannot secure the right Brexit for Britain. A leader who had called an election ostensibly on Brexit, but then said virtually nothing about it, is in no position to threaten one when there is a genuine case for one. In reality, the last thing Jeremy Corbyn wants to do is fight an election defending a Soft Brexit designed for the City that, to borrow from Jacob Rees-Mogg, leaves Britain a vassal state. A strong Conservative leader would find the votes in the House of Commons that Dr. Fox says Mrs. May lacks.

Since losing her two chiefs of staff after the 2017 election debacle, Mrs. May has lost her voice and her spine. As James Forsyth suggests in this week's issue of The Spectator, she has a choice. Either she leads the party or passes on her position.

Rupert Darwall is author of Green Tyranny: Exposing the Totalitarian Roots of the Climate Industrial Complex.