22 June 2022

Why even the Brexiteers are in despair over Brexit

Leavers have collided with the reality that the potential benefits of Brexit are far outweighed by the costs.

Six years on from the EU referendum, we have reached the “Brexit hasn’t failed, it’s just never been properly tried” stage of the revolution.

The sense now pervades the Brexit nomenklatura that the “actually existing Brexit”, as their Soviet counterparts would presumably have called it, is failing. They fear that the public views it as a major cause of our economic woes, rather than part of the answer to them.

What is to blame for the right not being given the Brexit it wanted? Mercifully for Leavers, such as the former Brexit secretary David Davis, the answer is clear: it’s a failing Brexit because it’s a Remainers’ Brexit.

This lament is exemplified by two narratives. First, the inability to reap the opportunities of Brexit is blamed on what the Sunday Telegraph editor Allister Heath called “the failed dogmas of our permanent leftist elite”. Second, in an argument that unites multiple Conservative factions, the failure is largely due to Boris Johnson’s weakness against such forces. The Prime Minister has betrayed Brexit because he is a “tax cut defeatist” and a high-spending statist.

This is what I find most interesting about our political moment. Johnson’s version of Brexit, as negotiated by David Frost (now Lord Frost), one of his foremost critics, is certainly not “soft”. It is a “hard Brexit”, not a “Remainers’ Brexit”. And, by design, it involved a thin trade deal, precisely on the grounds that anything thicker would entail intolerable constraints on UK sovereignty.

Or, rather, Great British sovereignty. A key feature of Johnson’s Brexit – radically different from Theresa May’s unsaleable mishmash – was always to leave Northern Ireland behind in the EU single market for goods and allow Britain to diverge. (And Johnson knew very well in 2019 that this entailed a trade border in the Irish Sea.)

For the Brexit revolutionaries, the problem with Boris Johnson is not that his Brexit is “soft”; it is that he is not using it to create the small-state, low-tax nirvana that some Leavers demand.

Johnson could just about get away with this while higher state spending was devoted to protecting the economy during the Covid-19 pandemic. But no longer.

Now he has joined the Treasury gloomsters in resisting immediate tax cuts and been captured by “our permanent leftist elite”. Betrayal. One could almost feel sorry for the man, were it not that a hard Brexit – damaging for trade, business investment, productivity and hence tax receipts – was the Brexit to which he committed himself.

A key fact is forgotten when we debate the history of the past six years. The version of Brexit that attracted most Leave voters at the referendum was essentially neutral. It was indeed about “taking back control”. But that meant elected governments of whatever hue being able to more freely enact whatever programme the public voted for. The space for policy differences, as contested at national elections, would be opened up. Supra-national technocratic “control”, insulated or removed from democratic accountability, would also be reduced.

One may doubt the extent to which any state, even a superpower, has this degree of autonomy, but the democratic appeal is obvious. No one in 2015-16 was arguing “there is only one true, tolerable version of Brexit and it is ultra-hard, it necessitates a serious reduction in the size of the state and radical tax cuts: anything less will be unacceptable”.

The Leave campaign argued that voters would have choices restored to them that Brussels had removed – from trade to farming policy, from regional and industrial subsidies policy to environmental and labour regulation – not that there was only going to be one choice. That was powerful.

I do not regard the Norwegian or Swiss models, which entail full or partial membership of the European single market, as optimal for the UK. This is partly because I am a realist about whether either major party could ever reintroduce full free movement of people and partly because, on financial regulation in particular, it is inconceivable that the UK could accept rule-taking in the way Norway does. But politicians who say these models would represent a betrayal of the “will of the people” did not always argue as much. Only a year before the referendum, Nigel Farage talked up the merits of the Norway model, while plenty of European Research Group members at that time favoured membership of the single market.

Johnson’s Brexit would once have been viewed as “hard” beyond the wildest dreams of many Eurosceptics. “Brexit” has thus morphed in six years from being a proposition supposedly about governance, regardless of who might be in office, to being a programme for a particular style of Conservative government.

Far from cementing Brexit as “done”, its proponents argue – wrongly – that Brexit is in constant danger of being reversed and will only ever be complete when that post-Brexit programme has been forced through.

Why have we ended up here? First, because the only way to sustain enthusiasm for the revolution when it is not delivering any obvious economic benefits – and the downsides are becoming clearer – is to say that it is in mortal peril from its enemies, and that it can survive only if the counter-revolutionaries of Whitehall and big business are thwarted and culled.

I hold no candle for insider elites on either side of the Channel – they often merit scorn. But those conservatives, such as Frost, who make this argument while citing Edmund Burke are really followers of Maximilien Robespierre. Unless the revolution devours ever more children and keeps on breaking new ground, it will cease going forwards and start going backwards.

The furore over the European Convention on Human Rights (ECHR) in relation to the attempted deportation of asylum seekers to Rwanda is a classic example of this syndrome. The more the government fails to achieve serious regulatory divergence, the more new battles it has to declare. It needs them in order to reunite the 2019 Red Wall and Blue Wall Brexit coalition. That coalition won’t be enthused by some worthy revision of, say, financial market regulation: voters simply don’t care.

This new campaign isn’t about the merits or otherwise of the ECHR. It is the latest upshot of the dominant thought driving the Brexiteer agenda: “If we don’t keep pedalling, the revolution won’t just stop; it will slide backwards.”

This way of thinking is the inverse of the much-discussed “bicycle theory” of integration, which has been used to explain the seemingly unavoidable pressure to continue with wider and deeper integration at a global or European level.

The bicycle theory as it applies to trade liberalisation, both globally via trade rounds and within the EU via the single market, holds that if you do not continue aggressively dismantling barriers to free trade, your economic project will fail. If you stop pedalling the bike, you will fall off.

Even free-trading optimists would frequently characterise the single market, despite the huge volumes of legislation that created and developed it, as defective, incomplete and fragmented. The war against pernicious “behind the border” non-tariff barriers was always in danger of being lost unless the resistance within countries to trade liberalisation, usually by way of preferences given to “their” firms against foreign competition, was worn down.

The sense that everything ultimately led to “more Europe” – that this was a one-way journey to more integration – was a key part of Brexit, and of other anti-EU movements elsewhere. But what happens when you deliberately, radically “deintegrate”, which is what a hard Brexit means?

We know much less about the logic of deintegration for the simple reason that no developed country has chosen to leave any trade bloc in our lifetimes. But we do see the new bicycle logic in operation.

This is exactly what is playing out in relation to asylum seekers and the ECHR. Leaving the EU did not have to entail leaving the Dublin Regulation, which sets out which country is responsible for looking at an individual’s asylum application (usually the country where they first arrive). It applies equally to Iceland, Norway, Switzerland and Liechtenstein, none of which are in the EU.

But Johnson’s Brexit did mean leaving the Dublin Regulation. This poses severe problems as to whether the UK can return asylum seekers to EU countries where they first landed, without any legally binding replacement agreement.

The Johnson government expressed its intention to agree bilateral legal deals with individual states to this end. But it has made no progress in signing such deals because that is a diplomatic world those individual states don’t – and don’t wish to – inhabit any more.

The UK either accepts it has to negotiate and agree a treaty with the EU as a bloc, or accepts that its policy of legal removals and returns of asylum seekers to EU states has disintegrated. The result? Further impetus towards radicalisation. And if the UK ends up either leaving the ECHR or curtailing its judgments – it will be said we have not taken back control of our borders until we have left the ECHR (already a tabloid headline) – it will entail further radicalisation of the aims of the revolution.

However, permanent deintegration creates just as many challenges as permanent integration. In creating its own internal market, the UK government is painfully relearning some of the early lessons of Europe’s evolution from a customs union to a common market to a single market. A common external trade policy forces a greater degree of internal harmonisation (for example, ensuring that a product or service that can be legally sold in one part of the UK can be sold everywhere in the UK).

But it takes no great prescience to see that nationalist parties in Scotland and Wales could deploy exactly the same argument that Brexiteers used against EU market integration. The gains of devolution settlements in allowing markedly different policy preferences within the Union would get reversed by a full-frontal London assault. There’s a real risk that deintegration from the EU leads to more Westminster-based centralisation, in turn boosting support for Scottish and Welsh independence.

It is reasonable for Leave voters to ask successive Brexit secretaries and negotiators why, in the six years since the referendum, they have delivered so few of the benefits of divergence they promised and why they have all talked a much better game after leaving office.

The problem Johnson’s government faces is not that it would be impossible to regulate certain industries better domestically than under EU rules. It is that the gains from doing so are simply not as great and not as immediate as the sizeable losses to trade and investment from Brexit – a view common to the Bank of England, the Treasury, the Office for Budget Responsibility and City economists. It is those losses that are weakening the public finances and making serious tax cuts harder to finance, which is why a government that professes enthusiasm for low tax is burdening the private sector with higher taxes than at any time since Clement Attlee was in No 10.

When one moves from campaign mode, at which this government is good, to policy design and delivery mode, at which it is dismal, life is much harder.

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