Martin Mayer, TUC delegate to the EU Economic and Social Committee
By Martin Mayer, UK TUC delegate to EU Economic and Social Committee
December 2017
“BREXIT means BREXIT?”
Reality check on current status of the BREXIT negotiations
On Friday 8th December, Theresa May and Jean-Claude Juncker finally signed the piece of paper that signalled the completion of the first stage of the negotiations, with the expectation this will trigger the long awaited negotiations on the UK’s future trading relationship with the EU, as a third country outside the EU, the single market and the customs union.
Yet just days before, the UK Government’s handling of BREXIT negotiations had descended into farce. Firstly on the Monday, Theresa May with pen poised to sign a deal on the Ireland border was forced into a humiliating climb-down when the DUP refused to agree at the last minute. The next day David Davies Minister for BREXIT made the astonishing admission to Parliament that the BREXIT impact assessments on 82 sectors of UK economy didn’t even exist. On Wednesday Philip Hammond stated that whatever financial divorce bill was agreed would be paid irrespective of the nature of any eventual deal, only to be slapped down hours later by a No 10 spokesperson. Perhaps most staggering of all, he also admitted that the Tory Cabinet has not even had a discussion about what type of BREXIT deal the Government is looking for. With the EU and the whole world looking on aghast, it seemed that 18 months after the UK Referendum we were no nearer to clearing the initial 3 hurdles set by the EU before talks on a future trade deal can begin (citizens rights, the financial divorce settlement and the Irish border).
The Irish border – far from being a side issue of relatively little importance as some Tory Brexiteers assumed- has proved to be absolutely central to what BREXIT is about as it exposes all the conundrums implicit in a divorce from the EU. All sides say they want to retain an open border in Ireland but this has to be more than “aspirational” and must be based on the hard reality of what an external EU border with a third country (in this case the UK) will look like. If, like Switzerland and Norway, we retain at least some aspects of the single market and the customs union, then an open border and near-seamless trade could be maintained. On the other extreme, if we leave both the single market and the customs union and embark on a bonfire of EU laws on consumer rights, employee protections, environmental standards and free movement as demanded by the far right neo-liberal Tory Brexiteers, a hard border with tariffs is the inevitable consequence not just in Ireland but at Dover and all other crossing points between the UK and the EU.
Theresa May, under massive pressure to break the deadlock on the first stage of the talks and after her Government has wasted 18 months trying in vain to move onto the second stage without dealing with the first, attempted to make progress on the Irish border issue by guaranteeing a large degree of convergence with EU regulations north of the border post-BREXIT (perhaps something akin to the Norway/Switzerland solution?). The problem with the original paper that Monday was there was no such assurance for the rest of the UK in its future relationship with the EU. The DUP quite rationally feared the inevitable consequence would be the movement of the EU/UK border from Ireland to the North Sea, something long mooted behind the scenes as a possible solution but one that was always clearly and emphatically rejected by the DUP whose 10 votes prop up the Government. It’s not that the DUP object to a soft BREXIT per se, but to find Northern Ireland placed at the other side of the effective border with the rest of the UK not only fundamentally challenged the integrity of the Union, but raised huge dangers for the DUP about the future prospect for the Republican dream of a re-united Ireland inside the EU. To add fuel to the fire, the DUP was not given sight of the document till late Monday morning literally hours before Theresa May was due to sign it off with Jean Claude Juncker in Brussels.
The answer was to apply the term “regulatory convergence” not just to Northern Ireland but equally to the whole of the UK (something the DUP acquiesced to rather than openly agreed). To the EU’s negotiator Michel Barnier, this means the UK would to a greater extent maintain many of the EU regulations relating to the single market, thus making near seamless trade between a post-BREXIT UK and Europe a distinct possibility. But not according to the UK’s negotiator David Davies who sparked real consternation in Brussels when once back in the UK he declared the paper was not legally binding and all was up for grabs in the eventual trade talks. It is pretty serious when the Commission then accuses the UK negotiator of a “breach of trust” and the EU Parliament days later when endorsing the deal, actually adds an amendment damning David Davies by name. The EU Commission is now scrambling to turn this “gentlemen’s agreement” into a legally binding document to seal the basic principles for Britain’s divorce settlement.
After months of Tory manoeuvrings to avoid complying with the EU’s three negotiating requirements for a divorce settlement prior to any post-BREXIT trading relationship is discussed, Theresa May’s signed agreement signifies a complete about turn. The EU now has the UK’s acceptance to a divorce bill ( a compromise figure of around £40B appears acceptable); an agreement more or less on EU and UK citizens rights; and now a solution to the Irish border problem by UK committing to “regulatory convergence”. On top of that, UK has agreed to the jurisdiction of the European Court of Justice for years to come, once ruled out under one of Theresa May’s “red lines”. The Tory Brexiteers once boasted they would dictate terms to the EU, which in turn would roll over in its desperation to maintain trade with us. Instead the EU 27 stayed firm and the UK Government bowed to the inevitable at the eleventh hour.
Any sensible reading of the document signed by Theresa May should mean that a hard Brexit is now dead in the water. It is clear the Tory cabinet does not understand this. After its long awaited discussion on what a future BREXIT should look like, the Tories still seem to think they can have their cake and eat it:
Regulatory convergence? Boris Johnson and Michael Gove boast in the Sunday Times that they’ll scrap the EU Working Time Directive and other “burdens on business” in their bid for a deregulated low cost low tax Britain outside the EU. Forget even a Canada-style Free Trade Agreement on that basis.
Outside the Single Market? The Tory Cabinet want to retain free access for the financial sector (the only part of the economy they actually care about), ignoring Michel Barnier’s consistent explanation that you cannot be half in and half out of the Single Market. No cherry-picking, he said.
A Canada PLUS PLUS Trade Deal? They want a free trade agreement better than Canada, with something like single market access especially for their beloved financial sector, but with the freedom to deregulate where they wish. They really don’t understand do they?
Is UK opinion on BREXIT changing?
The Referendum result in June 2016 delivered a 51.9% vote in favour of BREXIT and 48.1% for REMAIN. A series of recent National Centre for Social Research polls of the UK electorate has shown some interesting shifts in UK opinion. Polling in October 2017 revealed that 44% think it is wrong to leave whilst only 42% are still in favour of BREXIT. This is still only a slight shift in opinion but polls held in October 2016, January 2017, April 2017 and July 2017 show incremental shifts in public opinion in a consistent direction away from BREXIT. A recent SURVATION poll showed a slightly higher margin in favour of REMAIN at 48% compared to 42% for LEAVE.
More marked have been shifts in the view of those who voted Leave to a number of specific questions:
- “I expect Britain to be worse off after BREXIT”. In February 2017 54% of Leavers thought BREXIT would improve the economy whilst 15% thought it would inflict harm, a gap of 39 points. By October that gap has narrowed to 24 points.
- “I think the UK will get a good deal out of the BREXIT talks”. In February 51% of Leavers agreed compared to 20% who thought we’d get a bad deal. By October only 28% of Leavers thought we’d get a good deal whilst 38% expect a bad deal.
- “Would you support holding a referendum on any final deal?” A SURVATION poll of all voters in June showed 46% opposed to a second referendum and just 34% in favour. An identical poll in October showed 50% now in favour of a second referendum.
- A YouGov poll “do you think the negotiations are going “well” or “badly”. In April 40% thought they were going “well” and 35% “badly”. The most recent poll shows just 20% think negotiations are going “well” and 61% think they are going “badly”.
Public opinion is likely to shift further against BREXIT as the true implications of UK’s departure become clearer. Many people voted to LEAVE not only with a serious lack of information to help them make a reasoned decision (with the highly negative REMAIN campaign led by Cameron and Osborne having very little to say about the positive benefits of the EU) but also with misinformation and downright lies perpetrated by the BREXIT campaign. Just one example was the BREXIT claim that membership of the EU is very costly and leaving could save £350M a week for the cash-starved NHS (cash-starved thanks to £22B of austerity “efficiency savings” by this Government!). Now the Government (with the meek acceptance of the hard line Brexiteers who said they would never give the EU a penny!) has all but agreed a divorce bill of around £40B. That’s on top of Philip Hammond’s initial provision of £3B for the costs of BREXIT in last month’s budget, a sum which doesn’t even begin to cover the cost of increased border controls, or the creation of a whole range of new UK agencies to replace EU agencies we are walking away from. A recent Financial Times report quoted academic research stating the UK economy has already suffered a weekly £350M hit from BREXIT!
Europe regaining confidence after its “annus horribilis” in 2016
The shock UK referendum result in June 2016 could not have come at a worse time for the EU. The refugee crisis was in full swing and the EU was proving totally unable to cope. Some member states such as Hungary threw up armed borders in breach of the Schengen agreement. Islamophobic rhetoric and the rise of far right anti-EU political parties were making rapid advances. The Euro was down compared to other currencies and Europe’s economy was still struggling to recover post 2008 economic crisis with persistently high levels of unemployment, falling wages and sluggish growth.
Then many senior EU figures openly admitted we were in the grips of an EU crisis, some not sure the EU project could survive. 18 months on, the atmosphere has changed. The refugee crisis has subsided, the far right have failed to make the expected breakthroughs, the EU economy has picked up a little (now only Greece and UK are experiencing continued real decline in wages) and the reality of BREXIT, far from inspiring look-a-like calls from Europe’s far right parties, seems instead to have led to a lessening of their anti-EU rhetoric.
One welcome outcome of this enforced introspection has been a determination to rebuild a European Union that gives real value to its citizens, and provides hope and prosperity for the future, particularly to the younger generation. A wide range of EU Commission initiatives have come before the EESC for its opinion during the latter half of 2016 and throughout 2017. I list some of these initiatives below, but will deal in more depth with the detail of them in a future “A Union Voice from Europe”…
- A more transparent and better regulated financial sector that can withstand future shocks better than it did during the 2008 crash. This includes measures to create a Banking Union and a Capital Markets Union
- Tax accountability and a clampdown on tax evasion and aggressive tax planning, particularly by multinationals operating in the EU. This includes measures to introduce a Common Consolidated Corporation Tax Base, outlawing of tax havens, prevention of favourable treatment of some multinationals by some member states, sharing tax information and increasing transparency, and requiring tax advisors or other “intermediaries” to disclose any tax systems designed for the purpose of aggressive tax planning.
- Consolidation of the Euro area including greater integration and recommendation to members states to implement more expansionary fiscal policies including increased public investment in infrastructure and measures to increase wage growth.
- Strategic European investment funding ( the so-called Juncker plan) to stimulate the economy after years of austerity but specifically to combat persistent problems of high unemployment, particularly amongst youth and other disadvantaged groups.
- Putting the “Social” back into the “Social Europe”. Under the previous Commission President Barroso, the EU took a very distinctive neo-liberal, pro-business turn ignoring the more social aspects of the EU. Measures under his successor Juncker have included the new “Social Pillar” signed in Gothenburg in October 2017 which lays down an EU guarantee of individual social rights. This was opposed by Tory MEPs. We also keenly await developments on Juncker’s promised revision of the Posted Workers Directive intended to eliminate the exploitation of low cost migrant labour from other member states by guaranteeing equal pay.
- Wealth inequality. A very serious socio-economic debate is taking place across EU, sometimes led by the EESC, on how to deal with income and wealth inequality which has grown enormously since the 2008 Crash in almost every member state. Economic stagnation or sluggish growth and poor or non-existent wages growth is the inevitable result.
- Implementing the UN’s 17 Sustainable Development Goals. These cover everything from eliminating poverty and decent housing to clean oceans and sustainable agriculture. The EU accepts these are important goals for civil society and is committed to ensuring all its decisions incorporate compliance with the SDGs.
- A greener Europe – implement COP21 on carbon gas emissions. The EU is committed to meeting COP21 targets and requires member states to report on progress annually. Unfortunately the EU still relies on market mechanisms to green our energy supply when the evidence shows that public sector investment and direction is the key. Nevertheless the Commission has produced useful proposals on renewable energy generation including promoting small scale green energy “prosumers”, and decarbonising measures for transport and for building insulation and heating/ventilation systems
- EU Mobility Package. Designed to improve our transport connectivity, this package proposes a wide range of measures to re-regulate our road, rail and air transport, including some decarbonisation measures. Some of it is quite controversial and I will report in more detail about our work in the EESC Workers Group on this issue
- The Digital Economy and Robotisation. The EU is seeking to make Europe the forerunner in digital technology, rolling out 5G and encouraging public authorities to provide free Wi-Fi in public spaces. Also supporting the advancement of robotisation and automation, a controversial area for trade unions of course.
- The Gig Economy and new forms of work. The EU is seeking to regulate online platforms like Google, Uber and Air B-and-B which currently escape normal jurisdictions and often avoid tax. There is also concern expressed at new forms of work such as zero hours contracts and bogus self-employment. Concrete measures remain limited at present but EESC Workers Group is pressing for formal intervention in this area.
- Migration and asylum. There is strong consensus for a humanitarian approach in contrast to what we are seeing in certain member states. Improved border controls and security on EU’s external borders is part of the solution, but also a clear sharing of responsibility between member states to honour our international obligations to respect asylum seekers rights. Better trading relations with external neighbours and a more progressive trading policy generally. One way to help control unsustainable levels of immigration is to better support our external neighbours especially across the Mediterranean. Also the collapse of TTIP following huge public protests at the neo-liberal pro-business clauses in the draft treaty is encouraging a rethink. We are not there yet but an ISDS court system is not likely to be proposed in the future. A recent EESC “Own Initiative” Opinion on trade agreements proposed instead that future trade deals should concentrate more on implementing the UN’s 17 Sustainable Development Goals (SDGs).
- Better EU-wide coordination of arms manufacturing industry including funding of collaborative projects across a minimum of three member states
The TUC on Brexit
TUC Calls for a UK Negotiating Team that includes business and trade unions
France O’Grady TUC General Secretary said: “We are now over half-way from the referendum to Brexit day. But working people still don’t know what kind of Brexit they will get. And they still don’t know if their jobs and rights will be protected. To get a good deal in the precious time left, the Prime Minister must take back control. She must stand up to the Brexit extremists who are hijacking her government, sabotaging negotiations, and creating chaos as a ladder for their leadership ambitions. It’s time for a new approach that puts the national interest first. The Prime Minister should form a negotiating team that genuinely represents the whole country. Let’s call it ‘Team UK’. It would bring together every UK nation, all the main parties, business and unions. That way we can get on with negotiating a deal that protects Britain’s workers and British business.”
TUC’s assessment of the Brexit options
The TUC issued a report on 30 November “Putting Brexit to the Test” setting out five criteria against which the various options (WTO membership or ‘no deal’; the Turkish customs union; a CETA-style bilateral trade agreement; the Swiss multi-agreement model; a bespoke bilateral trade agreement as advocated by the government; the deep and comprehensive free trade agreement between the EU and Ukraine; and membership of the European Economic Area, commonly described as the Norway option) could be judged. The TUC’s five criteria or tests were:
- Protecting jobs through frictionless trade in goods and services, so that businesses do not pull out of the UK, and continue to invest here in the creation of high quality jobs.
- A level playing field to protect workers’ rights, so that they cannot be downgraded, and keep pace when improvements are made to the rights of workers across the rest of Europe.
- Dispute resolution and supervision, so that UK people do not have weaker legal protections for consumer, environmental and labour standards.
- Giving workers a say, so that workers’ representatives do not lose the right they currently have in the EU to advise on policy and law relating to workers.
- Protecting the Good Friday Agreement, so that the peace and prosperity that trade unions worked to help achieve is not put at risk from a hard border in Ireland.
Launching the report, the General Secretary said: “We need a Brexit that puts working people first. But ministers are playing Russian roulette with people’s jobs, rights and livelihoods. Instead of sticking rigidly to red lines that rule out the best deal for working people, ministers should go back to the drawing board. Membership of the broader European Economic Area would mean we can leave the EU but keep the benefits of the single market. It’s still the only current option we see that passes the tests for working people. We’ll listen to other ideas that could meet our tests. But time is running out, and ministers have not yet put forward a realistic alternative. The government must keep all options on the table, including remaining in the single market through the EEA. Otherwise Brexit could be a disaster for working people across the UK.”
The purpose of the report was in particular to sharpen the call for workers’ rights to be a key feature of the upcoming negotiations, but also to press the case for keeping all options on the table, a point picked up the following week in the Commons by Labour’s DExEU Shadow Secretary of State, Sir Keir Starmer. The TUC has kept in close contact with the opposition over these issues.
TUC joint statement with business groups led by the CBI and including the British Chambers of Commerce, the EEF, the Federation of Small Businesses and the IOD. The statement says:
Four million EU and UK citizens face a second Christmas of uncertainty about their right to remain in the countries they now call home. Despite signs that negotiators have made progress on this issue, they are being treated as bargaining chips and are left unsure of their position, especially if there is no deal between the UK and the EU.
Trade unions and businesses are deeply concerned that our friends, colleagues and workers continue to be in limbo. They deserve better treatment, given their vital contribution to our communities, businesses and public services.
The right to remain of the four million must be resolved. There must be certainty whatever the outcome of the Brexit negotiations. The UK government and EU27 should unilaterally guarantee their status and future rights before Christmas. Neither side need wait for the other to do this. If many who go home for holidays simply do not come back, this would have a damaging impact on critical public services and growth.
