The Fallacy of Easy Mutual Recognition of Standards

Mrs May and Mr Davis are opening a Pandora’s Box of complexity, confusion and chaos by advocating the Mutual Recognition of Standards to achieve ‘frictionless’ trade post Brexit.  They appear not even to know the basics, being unwilling or unable to clarify what they mean by ‘standards’, and consequently fail to acknowledge the many subtleties and ‘show-stopping’ problems involved.

Mrs May, in her Our Future Partnership speech at the Mansion House on 2nd March 2018, went no further than to express banal generalities about ‘standards’:

“The UK will need to make a strong commitment that its regulatory standards will remain as high as the EU’s. That commitment, in practice, will mean that UK and EU regulatory standards will remain substantially similar in the future.

Many of these regulatory standards are themselves underpinned by international standards set by non-EU bodies of which we will remain a member – such as the UN Economic Commission for Europe, which sets vehicle safety standards.”

Mr Davis, in his Foundations of the Future Economic Partnership Speech in Vienna 20th February 2018, was similarly vague about mutual recognition and standards:

“Such mutual recognition will naturally require close, even-handed cooperation between these authorities and a common set of principles to guide them.

And the certainty that Britain’s plan — its blueprint for life outside of the European Union — is a race to the top in global standards.

And not a regression from the high standards we have now.”

When they talk about standards, what do they mean? Parameters (for safety, performance, environmental impact etc.) and levels of performance against them? Highly prescriptive laws and regulations covering whatever bureaucrats can think of? Standards published by the International Standards Organisation (ISO) or the European Centre for Standardisation (CEN) or the British Standards Institute (BSI)? Organisations that have statutory duties (under UK and/or EU law) to assess conformity or enforce compliance? All of these? –  or something completely different?

Whilst clarity and precision are prerequisites for any published standard or specification, Mrs May appears to believe she has already been clear in setting out what she wants relating to mutual recognition of standards.  In her statement to the Commons 5th March 2018 Mrs May concluded:

“My message to our friends in Europe is clear.  You asked us to set out what we want in more detail. We have done that.”

Unfortunately for Mrs May and Mr Davis, they are not being at all clear what they want and show no indication of even trying to understand the subject of mutual recognition of standards, which they are so convinced they can get the EU to adopt. Furthermore, the arrangements they appear to be seeking conflicts with how the EU uses ‘standards’ and shows their ignorance of how the EU and Single Market functions.  Mutual recognition, where it exists at all, is being superseded by harmonised standards, processes, procedures, regulation and market surveillance, within a centralised legal and bureaucratic framework. Mutual recognition is the laborious, slow exception, not the fast rule.

The European Union (EU) is seeking to move towards the legally mandated use, without deviation, of harmonised requirements and published European Specifications and Standards, for instance  through its New Approach Directives (which cover many products).  These Directives (which are EU law) contain ‘essential requirements’ covering safety, reliability and availability, health, environmental protection, technical compatibility and accessibility. In turn, these may mandate requirements contained in a dated version of a ‘European specification’ which can be a common technical specification, a European technical approval or a national standard transposing a European standard.  A common technical specification is one which has been laid down in accordance with a procedure recognised by the Member States which has been published in the Official Journal of the European Union.

A Directive will normally only refer to a part (i.e., specific clauses) of a wider ‘European specification’.  European Standards can contain national deviations or special national conditions, but these are then disallowed in the Directive as part of the goal of achieving harmonised requirements.  Derogations (or variations) against requirements in Directives are discouraged requiring the granting of unique or special permission by the relevant authority which increasingly is an arm of the European Commission.  Generally national standards (or rules) can be used only where permitted by a Directive or in the absence of an applicable European specification.

There are published International, European and British standards for materials, components and finished products, processes, systems, management subjects etc. There are also more fundamental ones such as Basic Safety Publications which are intended for use by technical committees in the preparation of standards. Organisations from the UK participate in drafting committees in the ISO, CEN and BSI et al to produce published standards. This involvement will be unaffected by Brexit.

There is also considerable interchange between international standards (ISO, IEC, EN), often with common text or even numbering and cross referencing of requirements.  Also standards first produced by national bodies (such as BSI) can end up being adopted internationally as ISO or European Standards, with some re-drafting.   Generally, International Standards (from ISO, IEC, CEN, CENELEC etc.) are well refined whilst specified requirements in Directives can contain grammatical errors and be mixed with information, thus making them more difficult to follow.

Harmonising standards to produce a single internationally accepted standard and requirements at European or global level makes considerable sense for quality, safety, technical or functional compatibility, production and testing etc. Often, for historical and economic reasons, this is far from being immediately practicable. Perhaps the simplest illustration is paper sizes where the ISO series (which originated in Germany) is not followed in North America leading to endless document reformatting.

Rocking the ‘Standards Boat’, as Mrs May and Mr Davis propose, is a minefield and not for the unwary or ignorant. The above explanation is merely the tip of the iceberg since standards, to be of any use at all, need to be supplemented and implemented within an appropriate legal, regulatory and surveillance framework, which, like it or not, the EU has developed in considerable detail.   They are not going to change.  Consequently to get their Brexit strategy right and ‘deliver a wide range of benefits to enhance competitiveness and performance’ (available from the BSI or ISO), Mrs May and Mr Davis should practise what they preach and race to the top, under independent conformity assessment, by rapidly adopting ISO 44001:2017 (formerly BS 11000) Collaborative Business Relationships

Mrs May and David Davis misunderstand the EU and the EEA

Knowledge is power, so it is very worrying when  our senior politicians repeatedly display – through obvious errors and factually incorrect statements – a lack of understanding of the European Union (EU) and how it functions. These errors must inevitably undermine any chance of negotiating a satisfactory outcome for the United Kingdom and time is running out.

For example, Mrs May in her Our Future Partnership speech at the Mansion House on 2nd March 2018 said:

For example, the Norway model, where we would stay in the single market, would mean having to implement new EU legislation automatically and in its entirety – and would also mean continued free movement.

Norway participates in the European Economic Area (EEA) through membership of the European Free Trade Association (EFTA). Actually it only implements EU legislation necessary for functioning of the EEA, which at most constitutes around 25% of the total EU acquis (or system of laws). More than 90% of these EEA related laws reportedly originate in global bodies anyway, meaning that even if we left the single market, the UK would still need to abide by them for global trade unless we decided to leave the World Trade Organisation (WTO) as well.  Various members of EFTA  have unilaterally invoked Article 112 (the Safeguard Measures) of the EEA Agreement to restrict free movement. In the case of Liechtenstein, it was free movement of people  whereas for Iceland it was free movement of capital. The UK could do the same if retains membership of the EEA by re-joining EFTA. The “four freedoms” are NOT indivisble for non-EU countries, whatever  M. Barnier may say.  Ironically Articles 112 and 113, which Mrs May fails to understand and rejects, are reproduced closely by the EU in their draft Withdrawal Agreement, Article 13, allowing the EU unilaterally to restrict freedom of movement including immigration into the EU from the UK.

Mr Davis’ understanding of the EU’s modus operandi is no better, For example, Mr Davis, in his Foundations of the Future Economic Partnership Speech in Vienna 20th February 2018 said:

The European Union itself has a number of mutual recognition agreements with a variety of countries from Switzerland to Canada to South Korea. These cover a huge array of products — toys, automotives, electronics, medical devices — and many many more. A crucial part of any such agreement is the ability for both sides to trust each other’s regulations and the institutions that enforce them. With a robust and independent arbitration mechanism. Such mutual recognition will naturally require close, even-handed cooperation between these authorities and a common set of principles to guide them.

He appears unaware of the EU’s overall longstanding approach for the said huge array of products and didn’t quote any examples of regulations, institutions and authorities where his ideas are actually working.  So there is a bit of guesswork here as to what he intended and how well this fits in with the EU’s position, what is enshrined in EU law, and consequently how likely his (and Mrs May’s) new panacea for ‘frictionless’ trade (mutual recognition of standards) is to be realised.

The EU’s direction of travel (for the Single Market), by contrast with Mrs May’s and Mr Davis’s speeches, is towards harmonised standards, regulations, and enforcement or surveillance through a top-down centralised legalistic and bureaucratic framework. It is also a long established, publicly stated ambition that ‘third’ countries (outside the EU, or wider European Economic Area, EEA) should adopt or follow at least some EU-style measures.  The EU’s approach (to products) is outlined in principle in COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Enhancing the Implementation of the New Approach Directives, in more detail in the EU’s Guide to the implementation of directives based on the New Approach and the Global Approach and encapsulated in EU law in REGULATION (EC) No 765/2008 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 9 July 2008 setting out the requirements for accreditation and market surveillance relating to the marketing of products and repealing Regulation (EEC) No 339/93. The EU has also recently spelt out its position, which is consistent with its New Approach Directives, in Notice to stakeholders withdrawal of the United Kingdom and EU rules in the field of industrial products.  The adverse effect of Mrs May’s Brexit on a frequently essential part of this product jigsaw (the work of Notified Bodies for conformity assessment of products) is explained here.

The EU would seem to prefer an orderly Brexit, judging by its website, although it appears to have realised that even a smooth Brexit will be highly disorderly for many organisations with the UK reverting to “third country” status. A seamless Brexit is looking increasingly unlikely as our government’s failure to grasp the rigidity of the EU’s position has left it  in denial of the consequences for trade.  After many years of ceding powers to Brussels, we have ended up with a Prime Minister and chief negotiator who are completely out of their depth, while the Department for (not) Exiting the European Union lacks essential competence.  It is instructive to look at what serious items are missing from Mrs May and Mr Davis’s speeches rather than what is said which is often largely a collection of wishful thinking, anecdotes, regurgitated vacuous clichés and irrelevant boiler-plating.

The serious items that should feature include: an outline of how the EU is understood to manage trade (useful background); full specifics on what exactly ‘frictionless’ trade means quoting specific examples – named products, commercial activities and enterprises; the barriers that will exist (taking cognisance of EU requirements, such as here); how in practice these will addressed in ways acceptable to existing EU ways of working (in other words, how, when necessary, will we still be compliant with EU laws, regulatory practices and organisational frameworks); cost breakdowns; how payment for extra costs incurred will be addressed; a planned timetable; risk analyses and management arrangements; outlines of work to date including feasibility studies and assumptions; measures for functional integration across interfaces; signposts to further work and information.  Interfaces tend to cause problems and successful integration between, for example, different countries, standards, organisations, market surveillance practices, etc. would need particular practical attention.

If we are to see a seamless departure from the EU – and indeed, until we have the necessary expertise, it is logical to seek a stopgap, time-limited arrangement which will retain near ‘frictionless’ access for trade whilst ensuring that we truly exit the political structures of the EU on 29th March 2019 and largely cease to contribute to its politically motivated budget.  Remaining within the EEA via re-joining EFTA is the only viable option. To date we have not received an explanation from Mrs May why she rejected this route nor why she has shown no interest in using the flexibility in the EEA agreement to get a bespoke deal.  Her incorrect statement in her speech (quoted above) is nowhere near an explanation.

In contrast to a practical and relatively straightforward temporary solution to buy time, we hear instead a great deal of waffle about a long-term Free Trade Agreement (FTA) like no other.  Mrs May, Mr Davis et al are set on maintaining ‘frictionless’ trade by pressurising the EU to bend its existing rules (primarily incorporated into EU Laws and European Court of Justice, ECJ judgments), alter its longstanding direction of travel and at the same time pay all the extra costs (to the EU) of such a deal.  This arrangement is one which the EU can, and most likely will, refuse.

Photo by aronbaker2

Filling in the blanks

This past week has seen a flurry of activity on the Brexit front, but it is debatable whether we are any further forward in the process of achieving an exit from the EU which is both reasonably seamless and a genuine parting of the ways.

The first shots were fired by the European Commission  in the shape of a draft withdrawal agreement, which appeared on  Wednesday 28th February. Barely had the text been made public when Mrs May responded, saying that “no UK Prime Minister could ever agree to it.” The biggest bone of contention was the proposal that,  in the event of the two sides failing to agree on a solution to the Irish border problem,  Northern Ireland to remain in the EU’s customs union with a border between the province and the rest of the U.K.  Arlene Foster, the leader of the Democratic Unionist Party was equally forthright, stating in a tweet that “EU draft text is constitutionally unacceptable & would be economically catastrophic for Northern Ireland.”

Responding these swift rejections of the Commision’s proposal, Donald Tusk, who visited Mrs May in London, stated that the document was built on last December’s draft agreement on “Phase 1” of the divorce talks, with the blanks filled in, not out of any desire to provoke but merely because the UK has so far not come up with any proposals for dealing with the Irish border issue. “you fill in the blanks if you don’t like our suggestions” was the gist of his remarks. Michel Barnier added that the EU document has addressed the Irish border issue “in a practical, pragmatic legal fashion.”

So with there being no meeting of minds on Wednesday, would Mrs May shed any more light on how her government was going to fill in the blanks? She gave another speech on Brexit on Friday March 2nd and regrettably, it did little to clarify matters.   She still does not seem to have any idea of the extreme unlikelihood of the  EU agreeing to a system of  mutual product recognition, completely outside its present arrangements of assuring the standards of goods arriving from outside the EU. She acknowledged that leaving the single market and customs union would mean  “our access to each other’s markets will be less than it is now. How could the EU’s structure of rights and obligations be sustained, if the UK – or any country – were allowed to enjoy all the benefits without all of the obligations?” Fair enough, but anyone hoping for detail on what alternative arrangement she wanted to make  was going to be disappointed.

It is astonishing how badly advised Mrs May seems to be. In dismissing “the Norway model”, she said “we would stay in the single market, {which} would mean having to implement new EU legislation automatically and in its entirety – and would also mean continued free movement.”

This website alone has pointed out on umpteen occasions that Norway, Iceland and Liechtenstein only have to implement about one quarter of EU legislation and much of this relates to the technicalities of trade. What is more, Norway, if it so desired, could join Liechtenstein and unilaterally restrict freedom of movement from the EU using articles 112 and 113 of the EEA agreement. As an interim agreement, it reduces the burden of EU law by some 75% , compared with the EU’s proposals.

The only step forward, as Dr Richard North has pointed out, is that Mrs May acknowledged that many of these regulatory standards “are themselves underpinned by international standards set by non-EU bodies of which we will remain a member”. In particular, she noted that the UN Economic Commission for Europe (UNECE) “sets vehicle safety standards. Countries around the world.”

This speech, says Dr North, is “the first time in recorded history” that “we have a prime minister recognising that the EU is not the fount of all regulation and that “many” regulatory standards originate from “non-EU bodies”.

Much of the rest of the speech, sadly, was taken up with wishful thinking – good on mood music but totally lacking in any practical suggestions of how to move Brexit forward.

The biggest disappointments were that she did not announce the rejection of the EU’s proposals for a transitional arrangement- accepting every single part of EU law and any new ones they dream up for a period which may well extend beyond the projected 21 months.  Until this happens, there can be no real progress towards a deal which will be acceptable to her own MPs. Secondly, her comments on fisheries were a cause for concern:-“The UK will regain control over our domestic fisheries management rules and access to our waters.” That’s fine and if she had stopped there, everyone would be happy.

Unfortunately, she then continued “But as part of our economic partnership we will want to continue to work together to manage shared stocks in a sustainable way and to agree reciprocal access to waters and a fairer allocation of fishing opportunities for the UK fishing industry.”  These words do not suggest that she has yet been won over to Fishing For Leave’s exciting proposals to rejuvenate our fishing industry and coastal communities, which would make us once again a world leader. (see Fishing for Leave’s comments on her speech here)

Essentially, this week has just been an extension of the Brexit stalemate, even though some strong words have been said on both sides. How much longer can this last? In is now March 2018. In a year’s time, we will hopefully be leaving the EU. For all Mrs May’s talk of  “a bold new positive role for ourselves in the world”, we are none the wiser as to how she intends to achieve this.

Corbyn – misled and misleading

This letter from our Chairman appeared in the Derby Telegraph on Friday 2nd March



EU documents are rarely an easy read, so very few people bother to read them. Even politicians tend to rely on commentators or journalists, who also don’t read them, but who will tell people what they want to hear. Mr. Corbyn appears to be amongst the non-readers. Like many MPs, he seems to believe that the EU Customs Union facilitates swift movement of goods through border controls. It has very little to do with that and is mainly concerned with harmonising tariffs.

Turkey has an agreement with the EU Customs Union yet the crossing point to Bulgaria at Kapikule is notorious for delays. Lorries can be stuck there for days at a time. As studying EU documents is so boring for readers as well as for Mr Corbyn, I refer to another part of his recent speech.

“A Mini will cross the channel three times in a 2000 mile journey before the finished car rolls off the production line. Starting in Oxford, it will be shipped to France to be fitted for key components before being brought back to BMW’s Ham’s Hall plant in Warwickshire where it is drilled and milled into shape. Once this process is complete, the Mini will be shipped to Munich to be fitted with its engine before ending its journey in the Mini plant in Oxford for its final assembly…”

This statement is pure fantasy. Assembly is carried out at the BMW plant in Oxford. The Swindon plant produces body pressings and sub assemblies and the Ham’s Hall plant near Birmingham has made the engines since 2006.

Most of BMW’s aluminium block and head castings are made at Landshut near Munich and some of the machining is done at Steyr in Austria where other components for the Mini are also made. Since 2013 most of the machining and main assembly of the Mini’s engines is done at Ham’s Hall. The complete engines are mated with front suspension and steering units which are fitted to the cars as sub assemblies in the Oxford plant.

Mr Corbyn’s ignorance of the process of motor manufacture with its supply chain of components brought together and cars assembled in one plant is perhaps excusable in a man who has no industrial experience. But where did he get his strange ideas from? The answer is the media. This part of his speech may have been lifted from an Evening Standard article from July 2017 which, in its turn, may have been lifted from a Guardian article of March 2017.

Given his reputation for getting back to the roots of the Labour party, Mr. Corbyn could have consulted an engineer trade unionist who would have put him straight and stopped him making such an ass of himself. Yet the listening media took him seriously and did not realise it was being fed rubbish. So perhaps it doesn’t matter. People may draw their own conclusions about the reliability of the rest of his speech.

Yours faithfully,

Edward Spalton

Photo by Chatham House, London

Customs Union confusion – yet again

Jeremy Corbyn gave a speech about Brexit in Coventry today. He was 100% correct in his observations about the Government’s progress (or lack of it) :- “They can’t agree amongst themselves about what their priorities are or what future they want for Britain after Brexit….. The truth is we really don’t know much more about where they’re actually heading in these talks.

On the other hand, he has fallen into the trap into which a number of other politicians have fallen – he fails to understand what a customs union actually is.  He said, “During the transition period, Labour would seek to remain in a customs union with the EU and within the single market. That means we would abide by the existing rules of both.”

Why? if he wants us to stay within the single market, remaining in the customs union is superfluous. His reasoning is that “when 44 per cent of our exports are to EU countries and 50 per cent of our imports come from the EU, then it is in both our interests for that trade to remain tariff-free.”  That is fair enough, but Norway, which is not in the Customs union, manages virtual tariff-free trade with the EU. EFTA and EEA membership is sufficient.

Corbyn’s confusion is laid bare when he says that “Labour would seek to negotiate a new comprehensive UK-EU customs union to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland. ” How can the EU be part of a customs union with the UK while being a customs union in and of itself?

He then went on to say “But we are also clear that the option of a new UK customs union with the EU would need to ensure the UK has a say in future trade deals. A new customs arrangement would depend on Britain being able to negotiate agreement of new trade deals in our national interest.” If the UK was able to make its own trading arrangements, then it could not be in a customs union with the EU. The whole point of a customs union is that it includes a common external tariff. If we negotiated a trade deal with, for example, Australia while the EU did not have one, what would be the point if we were forced to charge the same tariff as the EU on Australian goods?

Perhaps Mr Corbyn and other advocates of either remaining in the EU’s Customs Union or somehow creating a new one with the EU should see what goes on at Kapikule on the border between EU Bulgaria and non-EU Turkey. Turkey is linked to the EU’s customs union, so you would expect reasonably seamless movement across the border. According  to this report, however, this is far from being the case, with delays for lorries sometimes lasting for several days.  A customs union may be a good idea for micro-states like Monaco or San Marino, but not for a country like the UK, where each year, over 2 million lorries pass through the port of Dover alone.

What we desperately need is a customs clearance agreement with the EU, or else we could face “Operation stack on steroids” on the M20 after Brexit Day.  Unfortunately, if so many of our senior politicians cannot distinguish between customs clearance and a customs union, there are good reasons to fear that Kent may become gridlocked with lorries in a mere 396 days’ time.  Yes, it really is getting that close and on the basis of today’s speech, it seems that the leader of Her Majesty’s Opposition has no more idea of how to save us from such a disaster by delivering a sensible, workable Brexit than our Government.

Photo by Peanut99

Post-Brexit, the UK economy could flourish if it is innovation-led

Recent economic predictions from the Treasury are probably grossly underestimating the potential positive benefits of Brexit, if only our government can seize the initiative.  After all, economists, especially those within the Civil Service don’t usually have extensive, if any, ‘hands on’ business experience. So how do they know the degree to which European Union (EU) legislation and regulation  – along with our government’s gold-plating and inertia – have held back many businesses, especially small and innovative enterprises?  However, loosening the bureaucratic chains is not that easy, especially when we are talking about people who are largely ignorant of their undesirable consequences, or not interested in doing anything.

Access to domestic and export markets for trading purposes are not enough in a highly competitive world.  UK Limited needs to provide goods and services that customers want to buy at prices they can afford in more attractive ‘packages’ than available from elsewhere.   To be able to pay high wages UK Limited needs to produce high value-added goods and services efficiently and continue to stay ahead even as competitors try to catch up. So how well are we, as a nation, doing?

The United Kingdom is a middle size economy with a poor record of productivity improvement. Whilst good at creating new jobs, these are overwhelmingly low wage, low productivity ones.  Major problems are poor labour force skills, under-investment and a ready supply (or over-supply) of low wage labour.  In effect then the UK is losing the ability to create high value-adding productive jobs; the world’s first ‘third world’ country in a cold climate.

The government could kick-start a change with Brexit. Controlling poorly skilled immigration would create an imperative for higher productivity and enable higher wages to be paid; it would stimulate innovation, training and investment.  Tax incentives, grants and risk sharing could also help. Encouraging home-grown start-ups and high value-adding foreign investment would also lead to better paid jobs. Public sector procurement could be a facilitator of wide ranging innovation. Yet the real key to success is the creation of an innovation-led economy for high value-added goods and services; develop, improve, become competitive, become world-leading, export and grow, repeat. However, this needs an understanding both of the nature of successful innovation, particularly low-cost innovation, and of mandatory regulations, including their objectives and implementation, in order to facilitate the former by manipulating the latter.

There is a common misconception that because we have been traditionally good at invention, we must be naturally good at innovation – doing existing things noticeably better. Not so. Many inventions and high or advanced technology products have failed commercially here for a variety of practical reasons including the lack of a viable market, pushing out the bounds of technology too far without sufficient development and politically driven lack of support.  Eric von Hippel in his book Democratizing Innovation identifies users as an important source of innovation; they identify a need and a commercially viable innovative product (for themselves and others) which subsequently moves back along the supply chain to suppliers and producers.

Any form of legally sanctioned regulation, with few exceptions, tends to create and then maintain a mandatory status quo, which may be far from evolving ‘best practice’.  It is difficult and slow, if not impossible to introduce changes, which obviously frustrates innovation.  It has been reported by the European Free Trade Association (EFTA) (reported originally here and recently here) that “more than 90 percent” of the EU’s Single Market rules (and by extension, those of  the European Economic Area, EEA) come from the UN and other global bodies, such as the World Trade Organisation (WTO), OECD, the Food and Agriculture Organisation and the United Nations Economic Commission for Europe (UNECE), all of which have been faithfully transcribed into EU law. The EU also tends to expand the basic requirements into mandatory bureaucratic processes, procedures, approvals, European Court of Justice rulings etc., and then our government, frequently gold-plates the rigidity, often leading to situations more favourable to larger (less innovative) businesses.

After Brexit, as a direct member of global bodies, the UK will be able to exert its influence directly to champion principles and practices in our innovation-led economy’s interests. Current EU membership prevents this. Temporary or permanent EU vassal status, (aka the Transitional deal on offer from the EU) would also prevent this.  The potential is also there, after Brexit, to adapt measures (or the way they are implemented) that don’t suit our interests, or to opt out to some extent.  We can become somewhat more flexible than total EU control-freak rigidity, although exporting does impose conformity with the regulatory framework applicable in the overseas market, which may well follow EU or EEA practices.

Public sector procurement could illustrate what is possible after Brexit.  The public sector (definitions vary) makes up somewhere between 40-50% of the economy and has considerable purchasing power. Procurement is governed in the main by the Public Contracts Regulations, which implement EU Procurement Directive 2014/24/EU, itself an implementation of the Agreement on Government Procurement (GPA) under the auspices of the WTO.  Yet although the preamble to the EU directive pays ‘lip-service’ to the need to encourage small and medium size enterprises (SMEs) and innovation, its implementation in this country often achieves the opposite result, as originally outlined here.

Outside the EU, it is perfectly feasible to rework and streamline the Public Contracts Regulations, to facilitate user-led innovation, and to support local entrepreneurial SMEs, social enterprises and start-ups, whilst maintaining the WTO GPA core. The time-consuming complexity of the procurement process and legislation incorporating ECJ judgments is a real problem at the moment, leading to the awarding mainly of large contracts and a fear of facing a legal challenge by an unsuccessful tenderer. Also the process is poor at managing risk (for example, Carillion) or in including local socio-economic factors. Collaborations between user and supplier (to facilitate innovation) are also discouraged in mainstream procurement. Such reworking of these regulations naturally needs strong governmental commitment and understanding of the ways in which they lead to discrimination. Unfortunately it is likely that Mrs May will retain the EU directive indefinitely, although it is not mandatory outside EU Member States.

Economic forecasts that largely ignore the effects on the economy of innovation are obviously suspect in the real world.  However, they do provide an indictment of government performance and its inability to seize the opportunities to facilitate an innovation-led economy.  If the government understood how innovation could be facilitated by Brexit and its policies adapted accordingly, then the future prosperity of everyone in this country would be considerably greater.