VALERO DOVAL
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An optimist's guide to Brexit

Remainers are paralysed by fear of leaving the EU. But it offers huge opportunities for change, on both left and right.

This article is from the New Statesman's Christmas issue. Take advantage of our special offers and get a subscription for yourself or a loved one this Christmas.

You hear it in the dingy corners of a crumbling Westminster Palace, at discreetly expensive restaurants and in noxious, Christmas-festooned pubs. You hear it from former prime ministers and lowly special advisers, and even from foreign leaders.

“Brexit will not happen.” It cannot actually happen. Parliament, we are told, will force the deluded people to come to their senses, aided by the judiciary and big business. If the people have made a mistake, then can they not be shown the latest economic forecasts and be obliged, somehow, to think again?

With respect to all involved, and – briefly – to adopt the demotic of Boris Johnson, this must be cobblers. If parliament asked the people of the UK to vote on a subject of such huge importance; and if, after exhaustive and exhausting debate, they made their decision, by a clear majority; and if they were then told that it wasn’t going to happen, or at least not without a second vote, the glossy fabric of British democracy would be ripped to shreds. Frankly, I dread to think what would follow.

It is time to think differently. Brexit is coming, and relatively soon. We have to assume that the UK will be outside the EU within two and a bit years. An entirely new chapter in our politics will then begin. Yet most of the British political class is so battered and demoralised by the Brexit decision that they cannot take what is likely at face value, and start to chart how they intend to reshape a country that has much more power over its own governance.

This is odd; and it is a dangerous wasted opportunity. Parliamentary power, expan­ded and reinforced, gives new opportunities to both the left and the right to change Britain. Rather than being paralysed by fear, we ought to be on the lip of a great invigoration of our democracy. Yet hardly anyone seems to be talking about the new agendas that are opening up.

On the left, this may reflect a terror that leaving the EU will inevitably result in a slaughter of regulations and a Hobbesian global-trade state, in which workers’ rights and environmental protection will go by the board. On the right, the lack of imagination about what, after all, so many people have been campaigning for, and for so long, is stranger still. It mostly adds up to a vague feeling that there will be less “meddling” and that the pungent odours of the 1950s – coal-smoke, hand-knitted woollen jumpers, bleach – will magically reappear.

Yet we are not going to be a different people. The instincts of the British electorate haven’t suddenly changed during 2016. It’s unlikely that we will veer enthusiastically back to the distant pre-European-migration past, or cast aside liberal and environmental ways of thinking that have become valuable to us in recent decades. For left and right alike, this is going to be a time of fresh, vivid and urgent debate.

We have to start, of course, with trade. Through the thick miasma of official waffling, some things are already becoming clearer. We will be out of the single market and will be out of a customs union – because if we weren’t, we wouldn’t be able to negotiate our own trade agreements around the world. Theresa May would hardly have created a new Department for International Trade if she intended it to have no purpose.

Yet the pressure from business and industry for access to European markets is also such that her government is going to have to offer Europe a deal on the movement of workers. The logical conclusion is that we will see sector-by-sector agreements to allow in X thousand electricians, or Y thousand careworkers, with industry bodies given coupons by the government and allowed to issue the work visas they require. This is the kind of thing that might allow EU leaders to grant low-tariff or tariff-free access to some markets, and stave off a downward economic lurch.

What it will also involve, obviously, is a higher level of continued movement from the EU into the UK than many Brexit voters expect. But the government will honourably be able to claim that it has “taken back control”. It will allocate the numbers coming in, giving it more direct influence on business and industry generally. As was hinted at with the early deal with Nissan, the change could prompt a move towards more physical manufacturing, at the expense of the service sector.

This is something politicians have been talking about since the 1970s, from Harold Wilson to George Osborne, to relatively little effect. After the deindustrialisation and Big Bang of the Thatcher/Geoffrey Howe era, our economy has drifted steadily further into financial services. We have been arguing, increasingly bitterly, about some of the consequences: the huge rewards for a small minority of bankers; the lack of German-style support for industrial manufacturing and the consequent lack of jobs for people who want to work with their hands; and the increasing imbalance in wealth and power between the metropolis and the Midlands.

 

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Some of the measures the left would like to take to support and protect the steel industry, or engineering, or to enhance our growing advantage in robotics, are made impossible not by British Conservatives, but by EU regulations on competitiveness and state funding. Make no mistake: an awful lot is back in play. Rail renationalisation, for one, despite the announcement this month about franchising of train tracks.

It is true that a Brexit deal that secured the interests of British carmakers while failing to secure the City’s “passporting rights” – so leading to a haemorrhage of financial institutions to Frankfurt, Dublin or Paris – would be extremely painful for the Treasury and the British state. Indeed, whether or not Brexit can be made to work financially will depend to a large extent on our ability to strike an early UK-US trade agreement that allows Britain to sell its service sector into the American market. Otherwise, the loss of tax revenues would be something the rest of us would have to make up, and austerity would be extended to cover a screeching handbrake-turn for the economy. Philip Hammond’s pallor is scary enough as it is, thank you very much.

Looking further ahead, however, manufacturing is already being transformed with new materials and 3D printing; there is no longer any reason to assume an endless downward spiral. The prospect of a new industrial policy is, in a sense, being forced upon Britain by the Brexit vote, but that is good news, not bad news: it ought to produce the most vigorous and excited debate.

Shrewder politicians on the left and right are already thinking about the opportunities raised by new trade agreements. Leading Tories see deals with poorer countries leading to cheaper clothing and food imports than we have now. Many EU trade deals with developing countries don’t include services because they don’t matter so much to other EU member states; they can now be extended to benefit us.

On the other side of the fence, Labour’s Brexit committee has been looking at how the left might develop a critique of global­ism. Part of this could involve the trade treaties to come so that they include environmental and worker protection clauses (and, indeed, human rights provisions) alongside agreements on tariffs.

Those involved, such as John McDonnell and Barry Gardiner, are discussing how a future Labour government could use British corporate expertise to leverage deals that are both progressive and expand trade. The Scotch whisky industry wants lower tariffs for the Indian market, for instance, but also boasts immense expertise on water quality, a big issue for Narendra Modi’s government. Are there more creative and imaginative agreements to be struck between Britain and India post-Brexit?

Defence is another significant area that will change. We remain, of course, in Nato and we should stop trying to hector the remaining EU countries about their own defence arrangements. But with Donald Trump in the White House, Nato will feel very different and with Putin’s Russia pushing hard, an independent UK will need to think about defence afresh. Now that even senior members of the defence establishment privately accept that Trident is old technology and increasingly vulnerable to satellites and drones, we ought to be having a big debate about what kind of defence we need and where our deeper interests lie (Estonia? Turkey?). What once was unthinkable no longer is.

Given that Britain, with GCHQ, is already a world leader in cyber security, we may well decide to ditch nuclear submarines in favour of a vast increase in intelligence. It is very unlikely, as the world gets more dangerous, that we will be able to spend less on defence. There won’t be a “No to nukes, Yes to better childcare” option of the kind the left would feel comfortable with. Our armed forces won’t be cheap but they will be very different; and yet politicians have so far said almost nothing about this. We have had a deep-frozen defence debate for years; it’s time for that to change.

The same kind of profound changes will be available in foreign policy. Able to act independently, Britain can forge a different policy for the Middle East; we can make our own policy on human rights in China, too. After Brexit, we should see a return to something like health for the ignored and enfeebled Foreign Office.

All of this, however, is only the beginning. The range of domestic policies that can now be thoroughly altered is breathtaking, covering everything from the funding of schools to forestry to employment rights. One area with scope for change is agriculture, which has been deeply enmeshed in EU lawmaking policy covering everything from the size of hedgerows and gates to inspection regimes for various kinds of farm, all tied to the doling out of subsidies from urban voters. Whatever version of Brexit is finally agreed, it seems inconceivable that farmers won’t want the best possible access to European markets for their meat, cereals and even wine. Consequently, any new inspection and hygiene regime will have to be at least as good (and therefore as intrusive) as the one we have now.

There are many other possibilities, though not all farmers will be pleased to hear about them. A different subsidy regime could tilt away from the largest landowners, who are already wealthy, to give extra support to struggling family farms and hill farmers – the kind the urban public most often admires and supports. (Cue howls of outrage from the Lords.)

We could have new laws to encourage the replanting of hedgerows and coppices, to protect our endangered birdlife. Some interesting work on forestry futures has been done by the government’s natural capital committee. Across the UK, only 6 per cent of our economy is low-carbon, but that has produced 30 per cent of growth over the past three years. Our island ecosystem is European but also subtly different, and we can handcraft legislation to reflect that.

Or, if we choose to accept that we are now an essentially urban country, a future government could tear up restrictions on housebuilding and urban sprawl and give the green light for widespread planting of genetically modified crops. At its most extreme, it could stop subsidising farming altogether, arguing that we already import most of our food, and that limited countryside space may be needed more for housing and recreation. Whether you think that’s a clever idea, or likely to lead to hideous shredding of communities, at least it’s a choice that will soon become available.

Environmental policy could be another area of change, though we are highly unlikely to follow Donald Trump’s lead and ditch all our green commitments. The big choices on energy policy will be the same outside the EU as inside: carbon emissions are now dealt with by a global treaty. Post-Brexit, are we going to opt for a somewhat less secure or safe nuclear industry? I rather doubt it.

In practice, we are becoming a more environmentally sensitive culture. It is hard to see a future government loosening laws on restricting airborne pollution from industrial plants, or on the disposal of chemical and electrical goods. Even the most right-wing Conservative administration is unlikely to make it easier to open new landfill sites or dispose of chemicals into rivers or near beaches.

Are we likely to want to reverse the effects of the EU’s Birds Directive? On the contrary, after Brexit, I would expect great British organisations such as the RSPB and the National Trust to become bigger voices in the national debate. In most of these areas, the freedom for manoeuvre will enable us to bring in better and tighter regulations, based on the needs of our own wildlife and landscape. At the very least, we can now look forward to arguments about pollution, waste and the proper protection of the landscape becoming fiercer than ever.

Coastal communities could be transformed by our leaving the EU. Old fishing towns have lost out to the growth in big corporate fleets, often owned by non-British companies, scooping up and processing the fish offshore. Gutting, smoking and the rest of preparation is no longer done around the ports and much of the “under ten” (smaller boats less than ten metres long) has vanished. All of this can be reversed.

Much of the EU regulation on fishing is designed to prevent overfishing and to protect stocks from spread of disease, particularly on fish farms. So unless we decided to overfish our own waters brutally, a quickly self-defeating policy – or unless we don’t care about exporting seafood – the space for expansion would seem limited. We could, however, go in entirely the other direction and introduce more stringent safety and hygiene rules, so that our exports would be particularly valued. Thinking bigger, there is now nothing to stop us creating our own extensive undersea conservation areas. Environmentalists are worried about the effects of bottom trawling on the North Sea. We could fish less, not more.

 

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On the other side of the world, the New Zealand government is creating the Kermadec underwater conservation park, a thousand kilometres north-east from the country’s shores. It will be an enormous area where all fishing as well as oil and gas exploration will be banned. New Zealand has shown that by putting “Keep Out” signs on significant parts of the ocean, it can even replenish fish stocks and biodiversity faster than scientists once thought possible. Could we do the same up here? The North Atlantic is a very different environment from the North Pacific, but a future British government could take a more assertive approach to underwater conservation. Whether or not it pleases pro-Brexit fishermen, it could prove a far-sighted environmental policy.

Those are just a few thoughts. There are probably many other areas where we will see a revived policy debate. Once we have control over VAT rates, and indeed the ability to create our own purchase tax, we can do away with absurdities such as taxes on tampons, and craft a tax system to encourage and discourage different kinds of spending – say, differential rates for high-sugar products, or special tariffs on electronic products that are hard to recycle. Why not?

There’s going to be a vigorous argument about all of that. But that is exactly my point. Almost without notice or comment, British politics has developed its own dependency culture, losing self-confidence about important changes of direction. Because of “Brussels”, politicians and civil servants have become a bit “computer says no”, taking it as the first principle that we can’t do this, we can’t do that. We can’t protect industries. We can’t really change economic direction. We can’t create new industrial hubs. We can’t change policy for the countryside. Well, now we can.

The defeated centre has spent a lot of time since the referendum asking whether the Great Disaster was “really” all about ingrained racism, fear of the modern world or media manipulation. Wouldn’t it be healthier to decide that the Leave side’s victory was about what it said on the tin – reclaiming political control – and then ask ourselves what we can now do with that extra freedom?

For all of us who believe in British democratic culture, there can be exciting times ahead. The winds of change can be invigorating, not simply bloody cold. 

Andrew Marr is a broadcaster and journalist. Formerly the BBC’s Political Editor, he presents the Andrew Marr Show on BBC1 on Sundays and Start the Week on Monday mornings on Radio 4.

This article first appeared in the 15 December 2016 issue of the New Statesman, Christmas and New Year special 2016

JON BERKELEY
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The empire strikes back

How the Brexit vote has reopened deep wounds of empire and belonging, and challenged the future of the United Kingdom.

Joseph Chamberlain, it has been widely remarked, serves as an inspiration for Theresa May’s premiership. The great municipal reformer and champion of imperial protectionism bestrode the politics of late-Victorian and Edwardian Britain. He was a social reformer, a keen ­unionist and an advocate for the industrial as well as the national interest – all values espoused by the Prime Minister.

Less noticed, however, is that May’s excavation of Chamberlain’s legacy is a symptom of two larger historical dynamics that have been exposed by the vote for Brexit. The first is the reopening on the British body politic of deep wounds of race, citizenship and belonging, issues that home rule for Ireland, and then the end of empire, followed by immigration from the former colonies, made central to British politics during the 20th century. Over the course of the century, the imperial subjects of the queen-empress became British and Irish nationals, citizens of the Commonwealth and finally citizens of a multicultural country in the European Union. The long arc of this history has left scars that do not appear to have healed fully.

The second dynamic is the renewal of patterns of disagreement over free trade and social reform that shaped profound divisions roughly a century ago. Specifically, the rivalry was between a vision of Britain as the free-trade “world island”, supported by the City of London and most of the country’s governing elite, and the protectionist project, or “imperial preference”, articulated by Chamberlain, which sought to bind together the British empire in a new imperial tariff union, laying the foundations for industrial renewal, social progress and national security. The roots of these commitments lay in his career as a self-made businessman and reforming mayor of Birmingham. A leading Liberal politician, Chamberlain broke with his own party over home rule for Ireland and, with a small group of Liberal Unionists, joined Lord Salisbury’s Conservative government of 1895, becoming colonial secretary. He subsequently resigned in 1903 to campaign on the question of imperial preference.

The fault lines in contemporary political economy that Brexit has starkly exposed mimic those first staked out in the early part of the 20th century, which lie at the heart of Chamberlain’s career: industry v finance, London v the nations and regions, intervention v free trade. This time, however, these divides are refracted through the politics of Britain’s relationship with Europe, producing new economic interests and political ­alliances. What’s more, the City now serves the European economy, not just Britain and her former colonies.

Chamberlain is the junction between these two critical dynamics, where race and political economy interweave, because of his advocacy of “Greater Britain” – the late-Victorian idea that the white settler colonies of Canada, Australia, New Zealand and South Africa should be joined with the mother country, in ties of “kith-and-kin” solidarity, or more ambitiously in a new imperial federation. Greater Britain owed much to the Anglo-Saxonism of Victorian historians and politicians, and was as much a Liberal as a Conservative idea. Greater Britain was a new way of imagining the English race – a ten-million-strong, worldwide realm dispersed across the “white” colonies. It was a global commonwealth, but emphatically not one composed of rootless cosmopolitans. Deep ties, fostered by trade and migration, held what the historian James Belich calls “the Anglo-world” together. It helped equip the English with an account of their place in the world that would survive at least until the 1956 Suez crisis, and it was plundered again by latter-day Eurosceptics as they developed a vision of the UK as an integral part, not of the EU, but of an “Anglosphere”, the liberal, free-market, parliamentary democracies of the English-speaking world.

Greater Britain carried deep contradictions within itself, however. Because it was associated with notions of racial membership and, more specifically, with Protestantism, it could not readily accommodate divisions within the UK itself. The political realignment triggered by Chamberlain’s split with Gladstone over Irish home rule, which set one of the most enduring and intractable political divides of the era, was symptomatic of this. For Chamberlain, Irish home rule would have entailed Protestant Ireland being dominated by people of “another race and religion”. Unless there could be “home rule all round” and a new imperial parliament, he preferred an alliance with “English gentlemen” in the Tory party to deals with Charles Stewart Parnell, the leader of Ireland’s constitutional nationalists.

The failure of Chamberlain’s kith-and-kin federalism, and the long struggle of nationalist Ireland to leave the UK, left a bitter legacy in the form of partition and a border that threatens once again, after Brexit, to disrupt British politics. But it also left less visible marks. On Ireland becoming a republic, its citizens retained rights to travel, settle and vote in the UK. The Ireland Act 1949 that followed hard on the Irish Free State’s exit from the Commonwealth defined Irish citizens as “non-foreign”.

A common travel area between the two countries was maintained, and when immigration legislation restricted rights to enter and reside in the UK in the 1960s and 1970s, Irish citizens were almost wholly exempted. By the early 1970s, nearly a million Irish people had taken up their rights to work and settle in the UK – more than all of those who had come to Britain from the Caribbean and south Asia combined. Even after the Republic of Ireland followed the UK into the European common market, its citizens retained rights that were stronger than those given to other European nationals.

In 1998, the Good Friday Agreement went a step further. It recognised the birthright of all the people of Northern Ireland to hold both British and Irish citizenship. Common EU citizenship north and south of the border made this relatively straightforward. But under a “hard Brexit”, Britain may be asked to treat Irish citizens just like other EU citizens. And so, unless it can secure a bilateral deal with the Republic of Ireland, the UK will be forced to reinvent or annul the common travel area, reintroducing border and customs controls and unstitching this important aspect of its post-imperial, 20th-century settlement. Will Ireland and its people remain “non-foreign”, or is the past now another country?

 

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Today’s equivalent of 19th-century Irish nationalism is Scottish national sentiment. Like Gladstone and his successors, Theresa May is faced with the question of how to accommodate the distinct, and politically powerful, aspirations of a constituent nation of the United Kingdom within the unsteady framework associated with the coexistence of parliamentary sovereignty and ongoing devolution. Scotland’s independence referendum bestowed a sovereign power on its people that cannot be set aside in the Brexit negotiations. The demand for a “flexible Brexit” that would allow Scotland to stay in the European single market is also, in practice, a demand for a federal settlement in the UK: a constitutional recognition that Scotland wants a different relationship to the EU from that of England and Wales.

If this is not couched in explicitly federal terms, it takes the unitary nature of the UK to its outer limits. Hard Brexit is, by contrast, a settlement defined in the old Conservative-Unionist terms.

Unionism and federalism both failed as projects in Ireland. Chamberlain and the Conservative Unionists preferred suppression to accommodation, a stance that ended in a war that their heirs ultimately lost.

Similarly, the federal solution of Irish home rule never made it off the parchment of the parliamentary legislation on which it was drafted. The federalist tradition is weak in British politics for various reasons, one of which is the disproportionate size of England within the kingdom. Yet devising a more federal arrangement may now be the only means of holding the UK together. May’s unionism – symbolised by her visit to Edinburgh to meet Scotland’s First Minister, Nicola Sturgeon, in the first days of her premiership – will be enormously tested by a hard Brexit that cannot accommodate Scottish claims for retention of single-market status or something close to it. Separation, difficult as this may be for the Scottish National Party to secure, may follow.

The idea of Greater Britain also left behind it a complex and contentious politics of citizenship. As colonial secretary at the end for 19th century, Chamberlain faced demands for political equality of the subjects of the crown in the empire; Indians, in particular, were discriminated against in the white settler colonies. He strongly resisted colour codes or bars against any of the queen’s subjects but allowed the settler colonies to adopt educational qualifications for their immigration laws that laid the foundation for the racial discrimination of “White Australia”, as well as Canadian immigration and settlement policies, and later, of course, the apartheid regime in South Africa.

Nonetheless, these inequalities were not formally written into imperial citizenship. The British subject was a national of the empire, which was held together by a common code of citizenship. That unity started to unravel as the colonies became independent. Specifically, a trigger point was reached when, in 1946, the Canadian government legislated to create a new national status, separate and distinct from the common code of imperial citizenship hitherto embodied in the status of the British subject.

The Attlee government responded with the watershed British Nationality Act 1948. This created a new form of citizenship for the UK and the colonies under its direct rule, while conferring the status of British subject or Commonwealth citizen on the peoples of the former countries of empire that had become independent. It was this that has made the act so controversial: as the historian Andrew Roberts has argued, it “gave over 800 million Commonwealth citizens the perfectly legal right to reside in the United Kingdom”.

This criticism of the act echoed through the postwar decades as immigration into the UK from its former empire increased. Yet it is historically misplaced. The right to move to the UK without immigration control had always existed for British subjects; the new law merely codified it. (Indeed, the Empire Windrush, which brought British subjects from the Caribbean to London in June 1948, docked at Tilbury even before the act had received royal assent.)

At the time, ironically, it was for precisely opposite reasons that Conservative critics attacked the legislation. They argued that it splintered the subjects of empire and denied them their rights: “. . . we deprecate any tendency to differentiate between different types of British subjects in the United Kingdom . . . We must maintain our great metropolitan tradition of hospitality to everyone from every part of our empire,” argued Sir David Maxwell Fyfe, the Tory shadow minister of labour and future home secretary.

As the empire withered away in the postwar period, some Conservatives started to change their minds. Enoch Powell, once a staunch imperialist, came to believe that the idea of the Commonwealth as a political community jeopardised the unity of allegiance to the crown, and so was a sham. The citizens of the Commonwealth truly were “citizens of nowhere”, as Theresa May recently put it. As Powell said of the 1948 act: “It recognised a citizenship to which no nation of even the most shadowy and vestigial character corresponded; and conversely, it still continued not to recognise the nationhood of the United Kingdom.”

Once the British empire was finished, its core Anglo-Saxon populace needed to come back, he believed, to find their national mission again, to what he viewed as their English home – in reality, the unitary state of the UK – rather than pretend that something of imperialism still survived. On England’s soil, they would remake a genuine political community, under the sovereignty of the Crown-in-Parliament. If Greater Britain could not exist as an imperial political community, and the Commonwealth was a fiction, then the kith and kin had to live among themselves, in the nation’s homeland.

Contemporary politicians no longer fuse “race” and citizenship in this way, even if in recent years racist discourses have found their way back into mainstream politics in advanced democracies, Britain included. However, the legacies of exclusivist accounts of nationality persist, and not merely on the populist right. British politics today is dominated by claims about an irreconcilable division between the attitudes and national sentiments of the white working classes, on the one hand, and the cosmopolitanism of metropolitan liberals, on the other.

But thinking and speaking across this artificial divide is imperative in both political and civic terms. Many Remainers have the same uncertainties over identity and political community as commentators have identified with those who supported Brexit; and the forms of patriotism exhibited across the UK are not necessarily incompatible with wider commitments and plural identities. Above all, it is vital to challenge the assumption that a regressive “whiteness” defines the content of political Englishness.

 

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Brexit thus forces us once again to confront questions about our citizenship, and the question of who is included in the nation. In an ironic twist of fate, however, it will deprive the least cosmopolitan of us, who do not live in Northern Ireland, or claim Irish descent, or hold existing citizenship of another EU country, of the European citizenship we have hitherto enjoyed. Conversely it also leaves a question mark over the status of EU nationals who live and work in the UK but do not hold British nationality. The government’s failure to give guarantees to these EU nationals that they will be allowed to remain in the UK has become a matter of deep controversy, on both sides of the Brexit divide.

As only England and Wales voted for it, Brexit has also exposed the emergence once again of distinct identities in the constituent nations of the UK. Although Scottish nationalism has been the most politically powerful expression of this trend, Englishness has been growing in salience as a cultural and, increasingly, as a political identity, and an insistent English dimension has become a feature of British politics. Although talk of a mass English nationalism is misplaced – it can scarcely be claimed that nationalism alone explains the complex mix of anxiety and anger, hostility to large-scale immigration and desire for greater self-government that motivated English voters who favoured Brexit – it is clear that identity and belonging now shape and configure political arguments and culture in England.

Yet, with a handful of notable exceptions, the rise in political Englishness is being given expression only on the right, by Eurosceptics and nationalists. The left is significantly inhibited by the dearth of serious attempts to reimagine England and ­different English futures, whether culturally or democratically.

It is not just the deep politics of the Union and its different peoples that Brexit has revived. The divisions over Britain’s economy that were opened up and positioned during the Edwardian era have also returned to the centre of political debate. Though as yet this is more apparent in her rhetoric than in her practice, Theresa May seems drawn to the project of reviving the Chamberlainite economic and social agendas: using Brexit to underpin arguments for an industrial strategy, a soft economic nationalism and social reform for the “just about managing” classes. She has created a new department responsible for industrial strategy and advocated places for workers on company boards (before watering down this commitment) as well as increased scrutiny of foreign takeovers of British firms. Housing policy is to be refocused away from subsidising home ownership and directed towards building homes and supporting private renters. Fiscal policy has been relaxed, with increased infrastructure investment promised. The coalition that delivered Brexit – made up of struggling working-class voters and middle-class older voters (or the “excluded and the insulated”, as the Tory peer David Willetts puts it) – is seen as the ballast for a new Conservative hegemony.

Presentationally, May’s vision of Brexit Britain’s political economy is more Chamberlainite than Thatcherite, a shift that has been obscured in Brexit-related debates about migration and tariff-free access to the European single market. Her economic utterances are edged with a national, if not nationalist, framing and an economic interventionism more commonly associated with the Heseltinian, pro-European wing of her party. In a calculated move replete with symbolism, she launched her economic prospectus for the Tory leadership in Birmingham, advertising her commitment to the regions and their industries, rather than the City of London and the financial interest.

It is therefore possible that May’s project might turn into an attempt to decouple Conservative Euroscepticism from Thatcherism, creating a new fusion with Tory “One Nation” economic and social traditions. It is this realignment that has left the Chancellor, Philip Hammond, often exposed in recent months, since the Treasury is institutionally hostile both to economic interventionism and to withdrawal from the single market. Hence his recent threat to the European Union that if Britain cannot secure a decent Brexit deal, it will need to become a deregulated, low-tax, Dubai-style “world island” to remain competitive. He cannot envisage another route to economic prosperity outside the European Union.

It also leaves those on the Thatcherite right somewhat uncertain about May. For while she has sanctioned a hard Brexit, in crucial respects she appears to demur from their political economy, hence the discontent over the government’s deal to secure Nissan’s investment in Sunderland. As her Lancaster House speech made clear, she envisages Brexit in terms of economically illiberal goals, such as the restriction of immigration, which she believes can be combined with the achievement of the new free trade deals that are totemic for her party’s Eurosceptics.

In practice, the Prime Minister’s willingness to endorse Hammond’s negotiating bluster about corporate tax cuts and deregulation shows that she is anything but secure in her Chamberlainite orientation towards industrial strategy and social reform. Her policy positions are shot through with the strategic tension between an offshore, “global Britain” tax haven and her rhetoric of a “shared society”, which will be difficult to resolve. May has embraced hard (she prefers “clean”) Brexit, but a transformation of the axes of conservative politics will only take place if she combines Euroscepticism with a return to pre-Thatcherite economic and social traditions. This would make her party into an even more potent political force. The recent shift of the Ukip vote into the Tory bloc and the notable weakening of Labour’s working-class support suggest what might now be possible. This is the domestic politics of Chamberlain’s social imperialism shorn of empire and tariff – only this time with better electoral prospects.

 

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There are some big pieces of 20th-century political history missing from this jigsaw, however. In the 1930s, Chamberlain’s son Neville succeeded where his father had failed in introducing a modest version of tariff reform, and trade within the empire rebounded. Britain abandoned the gold standard in 1931 and cheap money revived the national economy. The collectivism of the wartime command economy and the postwar Keynesian settlement followed. New forms of economic strategy, industrial policy and social reform were pioneered, and the Treasury beliefs in limited state intervention, “sound money” and free trade that had defined the first decades of the 20th century were defeated.

This era was brought to an end by the election of Margaret Thatcher in 1979. Her government smashed the industrial pillars and the class compromises that had underpinned the postwar world. The ensuing “New Labour” governments inherited a transformed political economy and, in turn, sought to fuse liberal with collectivist strands in a new settlement for the post-industrial economy. What many now view as the end of the neoliberal consensus is, therefore, better seen as the revival of patterns of thinking that pre-date Thatcherism. This tells us much about the persistent and deep problems of Britain’s open economic model and the continuing, unresolved conflict between finance and parts of industry, as well as London and the regions.

Brexit brings these tensions back to the surface of British politics, because it requires the construction of a completely new national economic and political settlement – one that will be thrashed out between the social classes, the leading sectors of the economy, and the nations and regions of the United Kingdom.

Few peacetime prime ministers have confronted the scale and kinds of challenge that Brexit will throw up: holding together the UK, revitalising our industrial base, delivering shared prosperity to working people and renegotiating Britain’s place in Europe and the wider world. This is the most formidable list of challenges. Lesser ones, we should recall, defeated Joe Chamberlain.

Michael Kenny is the inaugural director of the Mile End Institute policy centre, based at Queen Mary University of London

Nick Pearce is professor of public policy at the University of Bath

This article first appeared in the 19 January 2017 issue of the New Statesman, The Trump era