Public Policy

December 28, 2016

Making sense of post-Brexit uncertainty: Week 26


“We talk about it for twenty minutes, and then we decide I was right.” – football manager Brian Clough, on resolving a difference of opinion with his players

That’s how you do it!
This week saw Theresa May finish the political year, as well as the week that marked the six months’ anniversary of the UK’s EU referendum, by giving evidence to the Chairs of all of the House of Commons’ Committees (click here to view our 2017 Brexit timeline for the UK and EU.)

There has been a distinct lack of clarity from the UK Government in recent weeks as to what it wants from the exit and future trade talks with EU. Nowhere has this been more pronounced on whether a transitional agreement is needed. In front of the Liaison Committee, May was at pains to specify an “implementation phase” was on the cards, avoiding mention of a transitional agreement. The two sound suspiciously alike, though the PM doesn’t want to give air to any notion that could be seen to extend the period before the UK becomes a truly sovereign nation.

May spent the whole Committee session being as vague as possible: a Brexit plan would be published, at some point; immigration plans were being worked up and would be published, at some point; Parliamentarians will have the chance to consider and discuss the plan and any final deal; in the case of the devolved administrations, no answer on whether repatriated powers would ultimately make their way to Home Nation control. She was at least insistent on wanting to negotiate a divorce and future trading relationship with the EU concurrently and that this could be achieved not only inside two years, but 18 months (though the European Commission has said that a parallel process is not possible).

This was Theresa May reasserting control about what the UK is doing, what it wants, and what it is prepared to say publically. Indeed, it was perhaps a lesson to her colleagues in how to get through an examination without giving anything away. It wasn’t interesting, but the PM will have felt it important to show a clear UK line as the political curtain draws on 2016. May’s hope will be that her Ministers show the same discipline as we return from the holidays and the level of scrutiny grows.

Brexit Fish
A key part of the UK Government’s EU negotiation strategy, allied to its industrial strategy approach, has been to focus on six key sectors of the economy. The past week has really seen the first attack on this way of doing things. The business lobby group CBI emphasised that the Government should be negotiating on behalf of the “whole economy”. As CBI puts it: “products come with complementary services, supply chains overlap across borders, and many companies do not fit neatly into a single sector”.

And sectors may be important to the UK without necessarily being key employment and export drivers. The House of Lords EU Energy and Environment Sub-Committee report on UK Fisheries and Brexit reminds us that nothing is straightforward when it comes to Brexit. One would have thought Brexit and fishing could not be easier – we leave the EU and regain our territorial fishing waters, right!? Wrong, unfortunately as the Committee points out, fish are not aware of territorial areas or lines on sea charts! Indeed the Committee defines this as “mobility of many fish stocks”. Remember the Cod Wars in the Seventies? To add to the problem, the Committee recognises that this is an issue that the devolved administrations will have a view on, and in some cases, very strong views on.

The UK Government will surely want to hold firm to a prioritisation process, not least as a way of simplifying complexity but also to complement the Industrial Strategy White Paper which is due out in the second half of January. It will be interesting to see if the Government moves to an all-economy approach as further sectoral Parliamentary Committee reports are published in the New Year. Ultimately, we suspect not, at least not in private.

But the Committee reports will throw up lots of awkward questions. Indeed, the EU Energy and Environment Sub-Committee notes that “new bilateral, trilateral or coastal state agreements with countries such as Norway, Iceland and the Faroe Islands will be necessary, if the UK is to continue to play a part in co-ordinated management of shared and straddling stocks in the North Sea and the North-East Atlantic”.

This point also reinforces the concerns set out in the now infamous Deloitte memo about how many more civil servants Whitehall, but also the Devolved Administrations, might need to hire as a result of Brexit. Agreeing trilateral agreements and fisheries management plans with our close neighbours in Europe could be hugely time consuming and will need skills that are apparently thin on the ground within our civil service. And if it goes wrong the Committee notes, in its very understated way, that the UK would “invite retaliation”, risk “overfishing” and lose “mutual access arrangements” and create wider trade disputes!

That would hit the English where it hurts: at the local fish and chip shop!