Cameron’s legacy of confusion

David Cameron didn’t expect to lose last year’s referendum and banned the Civil Service from devising any exit strategy. That became an excuse for a nine month gestation period by Mrs. May which delivered only repetitions of “Brexit means Brexit”. The official leave campaign, vote.leave, refused to devise an exit strategy either. The only serious research on offer before the referendum which charted a comprehensive exit strategy was Flexcit, which recommended the EEA/EFTA route as a transitional arrangement. Since the referendum, only one further independent, detailed attempt has been made to tackle the issues involved – the Bruges Group’s What will it look like? which claimed that another exit route was possible within the time limit, while recognising a number of potential obstacles.

A recent post by Sir Jeremy Heywood, the Cabinet Secretary and head of the Civil Service painted a very upbeat picture of the work being done by the newly-created Department for Exiting the EU but he didn’t go into any detail about exit strategy. This department has far more staff available than the Bruges Group so it is rather worrying that we still know so little.

As our Chairman, Edward Spalton, has pointed out, when we joined the EEC in 1973, businesses were being briefed over a year in advance about the forthcoming changes.  Recently, a number of businessmen  who  met with government ministers, including the Brexit secretary David Davis, were very concerned about the lack of  detail they had been given. Similar reservations have come from groups ranging from the chemical manufacturers and the Federation of Small Business – the latter including a number of long-standing Brexit supporters.

Mr Davis unquestionably feels very confident about the UK’s prospects outside the EU. In the long term he could well be right. To be free of control by Brussels and able to manage our own affairs will be an inestimable benefit – but only if we are able to chart a sensible course through the choppy waters of what are shaping up to be far more complex negotiations than many Brexiteers ever imagined.

The stakes could not be higher for Mrs May and the Conservative Party.  There will be no backing out of Brexit.  Even though only a minority of MPs campaigned for leave, the majority of her party’s activists are staunch leavers and would not countenance any sort of betrayal. The unexpectedly strong showing by Labour in last month’s General Election only adds to the pressure. Any failure to deliver a competent Brexit as good as guarantees Mr Corbyn the keys to No. 10 in 2022 – or perhaps earlier.

Leaving  the EU  is the biggest challenge Mrs May and her team will face. We do not know what is going on behind the scenes but  the government  needs to have sufficient known policies in view to reassure the public, to avoid disrupting  economic expectations  and to deny traction to the campaign to rejoin the EU. Advice to all industries concerning the effects of government plans needs to be given in plenty of time for them to adjust.

To put it another way, our EU membership has been like a malignant, cancerous tumour. Untreated, it would have led to certain death. That’s why we were right to vote to leave. However, the complex task of cutting it out should  be done by a team of top surgeons who not only know what they are doing but can communicate their knowledge and confidence to the people. At the moment, even though there seems to be a growing agreement that some sort of transitional deal is necessary, no details at all have emerged.

Membership of the Single Market, even as an interim arrangement, has been ruled out and significantly, it was the Chancellor Philip Hammond, one of the “doves” in government, who stated this explicitly on the Andrew Marr show last Sunday. So what will it include? Catherine McGuinness, the de facto leader of the City of London’s municipal body, says Britain and the EU must agree the outlines of any transition before the end of the year or as many as 15,000 banking jobs could leave London.

The sense of lack of concentration was not helped by a picture of Michel Barnier and his EU team turning up  for the second round of Brexit talks with  great thick folders of notes while David Davis and his associates had none.

So will some positive signal emerge to calm worried businesses  – and indeed, worried Brexit supporters? If so, the sooner the better, as the opponents of Brexit are gleefully cashing in on the  lack of direction,  communicated by default.   Most people just want to see Brexit done and dusted with reasonable assurance of that steadily performing  economy on which all our livelihoods depend.


Our Chairman’s letter to the Derby Telegraph in the aftermath of the referendum


I am astonished at the downbeat response from many industries about the decision to leave the EU.

They appear to have been deliberately misinformed by the government – and to have swallowed it!

Around three quarters of EU legislation is geared to nudging us ever nearer to the Single European State – a country called Europe. That is the main purpose of the EU – “Ever Closer Union”.

The remaining 25% relates to trade regulation of the European Single Market, the only part of the EU project in which industry is interested. Arrangements already exist for non EU member countries to be in the Single Market without being in the EU political project. It is called the EEA – European Economic Area – the “Common Market” part of the project.

You can Google the detailed plan for continued participation in the Single Market. It is called “ FLEXCIT” . There are two versions – a forty eight page pamphlet and the full policy which extends to some 420 pages.

One objection to this policy is that the EEA involves the acceptance of the principle free movement of people. But, under Article 112 of the agreement, EEA member states can unilaterally impose restrictions when they experience excessive immigration. They do not have to ask anybody’s permission.

Another development which the government failed to mention is that most new business regulation is now global and comes from bodies like UNECE (United Nations Economic Commission for Europe) which, for instance, sets the standards for motor vehicles. Whilst there is an EU Directive about this, it was not made in Brussels but merely transcribed from what UNECE agreed in Geneva.

As an EU member Britain has no voice at the real “top table” in Geneva. As an independent country, it will be able to influence matters there.

So there is every reason to look forward to a period of greater British influence in the way world trade is regulated.

Yours faithfully

Edward Spalton

How many “Europhiles” really love the EU? – Some grounds for hope

Call me an optimist if you like, but the collective wisdom I have encountered this last week strongly suggests that, for all the froth in the press and the three million people who have signed the petition calling for a second referendum, Article 50 really will be triggered, possibly later this year, and we will begin the process of leaving the EU.

All our soundings from Parliament are sending the same message:- “The Government has accepted the result.” Yesterday,  I was invited by a US-based TV channel to take part in a chat show alongside long-standing europhile Hugo Dixon. It was very clear from his tone that he too had accepted that we will be on the way out of the EU sooner or later.

Reasons for suspicion and unease revolve around the simple phrase “You can’t trust the Tories over Europe”. It has been a mantra  among UKIP members and even some Conservative activists have acknowledged the duplicity of their party’s leadership when it comes to the EU.

David Cameron’s discreet manoevering to remove the unilateral repatriation of our fishing policy from the Conservative manifesto over a decade ago and his subsequent back-tracking on his “cast-iron” guarantee of a referendum on the Lisbon Treaty are been part of a long tradition  of Tory cover-ups going right back to Peter Thorneycroft’s infamous  campaign plan to take us into what has become the EU as far back as 1947:- “No government dependent on a democratic vote could possibly agree in advance to the sacrifices which any adequate plan for European Union must involve. The people must be led slowly and unconsciously into the abandonment of their traditional economic defences, not asked…”

Nearly seventy years on, however, it is very apparent that today’s Conservative Party does not contain such ideological europhiles as Thorneycroft or Edward Heath.  One of the many post-mortem articles I have read over the last few days (but for which I regrettably cannot find the source) pointed out that in 1975, Heath (for the Tories) and Roy Jenkins (for Labour), both passionate pro-Europeans, featured prominently in the campaign.  You could never imagine them  beginning a speech by apologising for the EU’s shortcomings. Nor would they bend over backwards like David Cameron to insist to their sceptical party that they really were eurosceptics at heart or talk in Corbynesque terms of  “Seven to Seven and a half out of ten” for staying in the EU. The absence of such people, the author claimed, was a fatal handicap for the Remain campaign.

It seems that for today’s Tory remainers, with the exception of veteran ideologues like Ken Clarke or Michael Heseltine, their reasons for supporting EU membership were more pragmatic than anything else. Leaving the EU would upset the status quo or would be bad for the economy. For those who have known nothing but a career in politics, Brussels offered a convenient and comfortable safety net for any MP losing his or her seat at a General Election.

This is a world apart from the passion which a real 24-carat, five-star Europhile feels for the project. Take Joris Luyendijk, a Dutch author and chat show host. Back in January we find him  moaning in the Guardian that even the so-called Europhiles in the UK were not really committed to the project.  “For England, the EU is an economic rather than a cultural and political project,” he wrote. “Read pro-Europe newspapers such as the Financial Times or listen to English pro-Europe politicians, and every argument is framed around the country’s national interest. In other words, the English attitude towards the EU is transactional rather than transformational.

Now we have voted out, he cannot contain his glee. With our country to leave the EU, there is no more danger of pooled sovereignty being rolled back – something about which Luyendijk is unapologetically enthusiastic. “When Europe’s democrats talk about “EU reform” they mean putting arrangements in place to make Europe’s pooling of sovereignty democratic. Britons mean the rollback of that very pooling of sovereignty.”  It is rather odd that Luyendijk has found himself in the company of Marine le Pen or his compatriot Geert Wilders in hailing Brexit  as a good thing – albeit for very different reasons – but he is delighted that “remain” lost:- “Had remain won the referendum, the EU would have become hostage to British sabotage. Future British prime ministers would veto any fundamental change involving the transfer of sovereignty, arguing, correctly, that their people had voted only for the current set-up of the EU.

Of course, Luyendijk’s bluster may conceal a nagging unease about the fact that, in his country too, disillusion with the EU project is growing, just as it is in France, Italy, Greece and even newer arrivals like Hungary and the Czech Republic.  Is he a spokesman for a dwindling minority?  Time alone will tell.

As far as the UK is concerned, however, now the vote has taken place, the shallowness of support for the EU within the Conservative Party has been laid bare. Luyendijk is quite correct here. There is very little enthusiasm for any further trasnfer of sovereignty to Brussels. Furthermore, even if the forthcoming leadership contest may be a bruising affair, the Tories have already (and thankfully) reverted to type – putting party unity and power before anything else.

In other words, the party seems to be coming together around a commitment to make Brexit work, even though they are far from united over the best way out. Vote.leave’s reluctance to provide a coherent exit strategy at the very start of the campaign has been one of the biggest drivers of the current economic and political uncertainty.  The leadership candidates all need to study Flexcit or its Adam Smith Institute-sponsored offspring, the Liberal Case for Leave, which, in the absence of any other serious offering,  provide the only coherent studies thus far of a seamless route out of the EU which will not disrupt our trade.

Thankfully, we know that the Civil Service have already been examining this escape route  in some detail and it is to be hoped that whoever emerges victorious as the next Prime Minister will have based their campaign not on personal charisma bur instead, on having sold their fellow-party members a clear road map that can take us through the invocation of Article 50 and on to the actual Brexit. Such a PM will leave this as his or her only legacy. So complex is the process of unravelling over 40 years of integration that Brexit will dominate their premiership to the exclusion of everything else

And I remain confident that this is what will happen. This is not to ignore the disturbing vacuum which David Cameron’s resignation has created, but with Labour in a state of meltdown and the Lib Dems having been reduced to impotence at last year’s general Election, the young europhile whingers – who will ultimately be the biggest beneficiaries of Brexit, even if they don’t believe it at the moment – will soon quieten down and the stage will be for the next Conservative Party leader  to atone for the party’s previous sins by finally obtaining an amicable divorce from the unhappy marriage into which his or her predecessor tricked us  all those years ago.

(for anyone wishing to watch the programme on the TV channel I referred to above, the link is here)

The only show in town, says Ambrose Evans-Pritchard

Leave camp must accept that Norway model is the only safe way to exit EU

By Ambrose Evans-Pritchard

The Leave campaign must choose. It cannot safeguard access to the EU single market and offer a plausible arrangement for the British economy, unless it capitulates on the free movement of EU citizens.

One or other must give. If Brexiteers wish to win over the cautious middle of British politics, they must make a better case that our trade is safe. This means accepting the Norwegian option of the European Economic Area (EEA) – a ‘soft exit’ – as a half-way house until the new order is established.

It means accepting the four freedoms of goods, services, capital, and labour that go with the EU single market. It means swallowing EU rules, and much of the EU Acquis, and it means paying into the EU budget.

Leavers know that if they gave in to these terms, they would drive away all those other voters who want to slam the door on immigration. So the campaign has been evasive, hoping to muddle through until June 23 with the broadest possible church.

Some Brexiteers have tried to square the circle with blue sky romanticism on trade, or sweeping talk of a ‘Hong Kong’ model, or by suggesting we fall back to the default settings of the World Trade Organisation.

Professor Patrick Minford from Cardiff University was refreshingly candid in proclaiming that his Brexit vision would “eliminate” most of Britain’s manufacturing – what he describes as a Schumpeterian “good shock” to clear away dead wood  – but this is just as Utopian as EU ideology itself. It is no an answer to the politics of Project Fear.

As my colleague Allister Heath argued last week, there are great numbers of middle-class, centrist, Tory-leaning readers of The Telegraph who want Britain to restore sovereign self-government, but have been rattled by the barrage of taxpayer-funded propaganda. They crave reassurance that it really is safe to vote for Brexit.

Prof Minford is right to denounce the Treasury’s document on the short-term horrors of Brexit as “intellectually deceitful”, but his reasons are different from mine. The Treasury claimed that a “vote to leave would cause an immediate and profound economic shock”. The hit to GDP ranges from 3.6pc to 6pc, with a loss of 800,000 jobs in a ‘severe’ scenario, comparable in scale to the collapse of Western banking system in 2008.

What is striking about this ghoulish document is that it did not model the Norwegian EEA outcome, even though this ‘off-the-shelf’ option is the most likely counter-factual. The reason is obvious. Had the Treasury done so it could not have come up with such alarming figures. 

There have been two excellent reports on the EEA option, one by the Adam Smith Institute and another entitled ‘Flexcit’ by Richard North from the EU Referendum blog

The Adam Smith Institute starts from the premise that the EU is “sclerotic, anti- democratic, immune to reform, and a political relic of a post-war order that no longer exists.” It says the EEA option lets the public judge “what ‘out’ looks like” and keeps disruption to a minimum.

“The economic risks of leaving would thus be neutralised – it would be solely a disengagement from political integration. All the business scare stories about being cut off from the single market would fade away,” it said.

The report argues that everybody could live with an EEA compromise, whether the Civil Service, or the US, or the EU itself. Britain would then be a sovereign actor, taking its own seat on the global bodies that increasingly regulate everything from car standards, to food safety, and banking rules.  

“As Britain is already a contracting party to the EEA Agreement there would be no serious legal obstacle,” it says.

David Cameron disparages the Norwegian model as a non-starter. “While they pay, they don’t have a say,” he says.

Actually they do. As our forensic report on Norway by Szu Ping Chan makes clear, they have a de facto veto over EU laws under Article 102 of the EEA agreement. Their net payments were £106 a head in 2014, a trivial sum.

They are exempt from the EU agricultural, fisheries, foreign, defence, and justice policies, yet they still have “passporting” rights for financial services. Their citizens can live in their Perigord moulins or on the Costa Del Sol just as contentedly as we can. 

They do not have to implement all EU law as often claimed. Norway’s latest report shows it has adopted just 1,349 of the 7,720 EU regulations in force, and 1,369 out of 1,965 EU directives. 

The elegance of the EEA option is that Britain would retain access to the EU customs union while being able to forge free trade deals with any other country over time. 

There would be no need for a desperate rush to both reach a modus vivendi with the EU and to renew all the EU’s 80 bilateral deals with other countries and regional blocs before the two-year guillotine fell under Article 50, the EU secession clause. 

Miriam Gonzalez Durantez, a former EU trade official (and Nick Clegg’s wife), argues that Britain is so short of trade expertise that it would struggle to assemble 25 experts even after repatriating staff from the EU. 

In this she is right. Where she is on shakier ground is to claim that we would need 500 officials “working intensely for a decade” to renew our third party trade deals.

Really? There is a simple administrative mechanism for the switch-over. All it requires is a filing at the United Nations under the “presumption of continuity” and trade goes on as before,  a procedure used time and again over the post-war era. 

This is what occurred after the break-up of Czechoslovakia and Yugoslavia. It was the formula used for decolonisation in the 1960s. It  would take a willful decision to override this mechanism of international law, and it is hard to see why a close allies such as US, Canada, or Japan would act in such a fashion.

The G20 and the G7 profess to stand for free trade and keep telling us a lurch towards protectionism would shatter the world’s fragile economic order. 

What is true is that any EU state could stop Britain stepping back to the EEA. Hell hath no fury like a union spurned. But Article 3 of the EU’s Lisbon Treaty says the union will uphold “free and fair trade” with the rest of the world, and this has legal force.

 Such vindictiveness would be the quickest and most certain way to tear the EU apart, for would it deeply damage the interests of the Dutch, Nordics, and Germans. It would cut across Britain’s intimate defence ties with France, and across Britain’s NATO pledge to Poland and the front-line states of Eastern Europe.

There may be many powerful reasons why Britain should remain in the EU, whether to ensure the comity of these Isles and show solidarity to Ireland, or to close ranks with our fellow liberal democracies at a time of civilizational threat. One thing that we do not have to worry about is a trade embargo, provided we stick to the safe ground of the EEA.

So we have bizarre situation. The Leave campaign is in effect lying about the Norwegian imperative because it dare not admit that EU migrants will continue coming to work in a post-Brexit Britain; and this in turn allows the Remain campaign to air its lies on economic Armageddon.

Just ignore them both. Every citizen is capable of reaching his or her own verdict on 40 years of EU conduct.

This article first appeared in the Daily Telegraph on 2nd June 2016.