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How the right’s Brexit dream died

Free marketeers believed that EU withdrawal could be used as a Trojan horse to impose a new economic model on the UK. But this was always a fantasy. 

On 5 July 2016, a fortnight after the UK voted to leave the European Union, Nigel Lawson, the former Conservative chancellor, succinctly defined Brexit’s purpose: “To finish the job that Margaret Thatcher started.” For the free market right, EU withdrawal was the method, the object was to change the British soul. Freed from the bureaucratic shackles of Brussels, the UK would discard cumbersome regulations and “red tape” and strike trade deals with “the Anglosphere”: Australia, Canada, New Zealand and the US. (Civil servants in the Department for International Trade labelled this vision “Empire 2.0”.)

On 24 June 2016, the morning after the Leave vote, the Centre for Policy Studies, the think tank founded in 1974 by Thatcher and her ideological outriders Keith Joseph and Alfred Sherman, declared: “The weakness of the Labour Party and the resolution of the EU question have created a unique political opportunity to drive through a wide-ranging supply-side revolution on a scale similar to that of the 1980s. This must include removing unnecessary regulatory burdens on businesses, such as those related to climate directives and investment fund regulations.” In May 2016 Tory Brexiteer Priti Patel, the then employment minister, remarked: “If we could just halve the burdens of the EU social and employment legislation we could deliver a £4.3bn boost to our economy and 60,000 new jobs.”

The week before the EU referendum the right-wing Spectator magazine, whose chairman is the BBC politics broadcaster Andrew Neil, published a cover casting the UK as a butterfly breaking free from a chrysalis. “Out – and into the world,” the headline read, as it had in 1975, when the title supported withdrawal from the EEC. Two and a half years later, the butterfly’s wings have been clipped. It is still heading out, but into the real world.

Even if the UK leaves the EU as scheduled on 29 March 2019, it will be bound by all European laws and regulations until at least December 2020 (the “transition period”). In the absence of an EU-approved solution to the Irish border problem, Britain will be prohibited from signing trade deals with other countries (having committed to a UK-wide customs union). The government has further agreed to maintain a “level playing field” with the EU27 in areas such as “competition, social and employment standards, environmental standards, climate change and relevant tax matters”. Far from being liberated, Britannia is enchained.

Theresa May has been identified as the culprit by her party’s Brexiteer wing. Jacob Rees-Mogg, the chair of the European Research Group, has submitted a letter of no confidence in his leader. Boris Johnson has said the Prime Minister is “on the verge of total surrender” to Brussels. Even Nick Timothy, May’s former co-chief of staff, has accused her of a “capitulation” and of never believing Brexit could “be a success”.

The suggestion is that, under a different leader, the UK’s Sisyphean fate could have been averted. But such an interpretation flatters the Brexiteers. For reasons far beyond the Prime Minister’s inadequacies, the dream of a libertarian Brexit was always a fantasy.


Although Thatcher warned against Brussels imposing “socialism through the back door”, she did not suggest leaving the EU

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The ideology that would become Brexitism was born on 20 September 1988 in Belgium. In her address to the College of Europe (“the Bruges speech”), Margaret Thatcher declared: “We have not successfully rolled back the frontiers of the state in Britain only to see them reimposed at a European level.” (Her Conservative conference speech a few weeks later warned of socialism “[creeping] through the back door of central control and bureaucracy from Brussels”.)

Thatcher’s words in Bruges were a riposte to another notable address 12 days earlier by Jacques Delors. Speaking at the Trades Union Congress in Bournemouth, the then European Commission president promised delegates a panoply of workers’ rights – prompting a spontaneous chorus of “Frère Jacques” – and spoke of a “uniquely European model of society”.

Labour, which had advocated withdrawal from the European Economic Community (EEC) in 1983, now embraced the project as a bulwark against Thatcherism. In parallel, the Conservatives, who had taken Britain into the EEC in 1973, came to view Brussels with ever greater suspicion.

But even at this juncture, Thatcher did not suggest Brexit. She spoke instead of “the remarkable progress” of the single market and insisted that: “I want to see us work more closely on the things we can do better together than alone.”

In the years that followed, few Tories backed withdrawal from the EU as opposed to merely reforming it. John Major’s government – in a largely-forgotten negotiating triumph – secured British opt-outs from the single currency and the Delors-inspired Social Chapter (which guaranteed workers a minimum of 28 days’ paid holiday per year, maternity and paternity leave and equal rights for part-time employees). But during the New Labour era, the UK became a recognisably more European economy: the Social Chapter was incorporated into British law and public spending rose from 34.8 per cent of GDP in 1997-98 to 44.9 per cent by 2009-10.

During these wilderness years for the right, the Eurosceptics were sustained by a potent intellectual infrastructure: think tanks including the Centre for Policy Studies, the Adam Smith Institute and the Institute of Economic Affairs; campaign groups such as the TaxPayers’ Alliance (founded by Matthew Elliott, the future chief executive of Vote Leave); publications including the Spectator and the Daily Telegraph; media proprietors such as Rupert Murdoch and Conrad Black; historians such as Niall Ferguson and Andrew Roberts; and Conservative libertarians such as Daniel Hannan and Douglas Carswell. To adapt a phrase from Alan Hollinghurst’s 2004 Booker-winning novel The Line of Beauty, they wanted the Thatcherite 1980s “to go on forever”.

One of the later key texts of this movement was Britannia Unchained (2012), a free market tract written by five emerging Tory MPs from the Free Enterprise Group: Kwasi Kwarteng (the recently appointed Brexit minister), Priti Patel (who later served as international development secretary), Dominic Raab (who resigned as Brexit secretary earlier this month), Chris Skidmore (now a Conservative vice chair) and Liz Truss (the Chief Secretary to the Treasury and libertarian torchbearer).

The book excoriated the UK’s “bloated state, high taxes and excessive regulation” and, most memorably, derided British workers as “among the worst idlers in the world”. Though Britannia Unchained did not advocate EU withdrawal, it exemplified the spirit that would later animate Brexit. Rather than learning from Germany and the Nordic states, as social democrats advocated, it urged the UK to emulate Australia, Canada and the Asian “tiger economies” (Hong Kong, Singapore, South Korea).

The free market right viewed the Cameron years as largely a wasted opportunity. Though public spending was sharply reduced, taxes and regulation were not. Cameron’s political philosophy – a fusion of banal Thatcherism, shire Toryism and modish Notting Hill liberalism – was too inchoate for the right’s purposes.

But when the UK voted Leave in 2016, free marketeers identified an alternative vehicle for their project: Brexit. A new Britain would be forged in the white heat of the anti-EU revolution. How, then, was this opportunity squandered?


Butterfly effect: The Spectator, 18 June 2016

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During the EU referendum campaign, Michael Gove, a former Times journalist, promised to deliver an address on how Brexit would strengthen the Union. The speech was never given. On 23 June 2016, the UK was politically fractured: England and Wales voted Leave by 53 to 47 per cent, but Scotland (62-38) and Northern Ireland (56-44) backed Remain.

The Irish border problem – the defining obstacle now faced by Brexiteers – was neglected during the campaign. In its final pre-vote, pro-Brexit editorial, the Spectator made no reference to either Scotland or Northern Ireland (while this magazine warned that Brexit would “threaten the hard-won peace in Northern Ireland by encouraging the return of border controls”). Others glibly suggested that the Irish border would be “completely unchanged” (Boris Johnson) or accused critics of “scaremongering” (Theresa Villiers, the then Northern Ireland secretary). Such was Leave’s exhilaration at the notion of a supercharged “Anglosphere” that it disregarded the future of the union that already existed. By contrast, Nigel Lawson was honest enough to concede that the UK’s departure from the customs union and the single market meant “there would have to be border controls” between the North and the Republic.

On 21 June 2016, two days before the referendum, Theresa May similarly warned that it was “inconceivable” that “a vote for Brexit would not have a negative impact on the north-south border”. Her subsequent pledge to prevent any new controls – a reaffirmation of the Leave campaign’s own promise – has forced her to accept indefinite UK membership of a customs union. The Brexiteer dream of “Empire 2.0” is being obstructed by the legacy of Empire 1.0: the Irish border.

But the belief that the Anglosphere could serve as a substitute for EU membership was always a delusion. The government’s own analysis suggests that the UK would lose between 2 per cent and 8 per cent of GDP growth over 15 years from a “hard Brexit” (withdrawal from the single market and the customs union), while new trade deals with the US and others would add no more than 0.6 per cent.

Britain, as politicians of all parties have long lamented, does not export enough. But there is little evidence that customs union membership is the main obstacle. Germany’s largest trade partner, for instance, is now China (to which it exports five times more than the UK). Britain’s problems are domestic in origin – low productivity and an under-skilled workforce, a lack of investment and poor infrastructure, an overdependence on finance and services – and domestic in solution.

For the UK’s economic maladies, the right prescribed its traditional brew of tax cuts, deregulation and privatisation. The “Singapore model” is the term that supporters – and some opponents – traditionally employ. But in so doing, they make the reverse of the point they intend. True, Singaporean public spending is low (18 per cent of GDP) and the top income tax rate is just 22 per cent. But far from being a libertarian Disneyland, Singapore has a significantly more dirigiste state than the UK, encompassing publicly-owned banks, airlines and investment agencies. The government owns 90 per cent of land and 80 per cent of Singaporeans live in state-built apartments.

The British right’s vision owes more, perhaps, to the American Republican right or even free market eastern Europe – Estonia, Georgia and Lithuania – where flat tax rates are common (recall that George Osborne flirted with this policy as shadow chancellor in 2005). But whatever label one applies to this model, it was a vision never shared by the prime minister who inherited Brexit.

From the outset of her premiership, Theresa May signalled that rather than extending Thatcherism, she intended to modify it. Her conservatism owes more to French Gaullism and German Christian Democracy than Reaganomics. For May, the state, not the market, is the means by which to advance national greatness.

One of May’s first acts as prime minister was to guarantee that all existing workers’ rights would be unaffected by Brexit (in contrast to David Cameron, who in 2007 pledged that restoring the UK’s opt-out from the Social Chapter was a “top priority”). Rather than reviving the 2012 Beecroft report on employment law – which proposed a “bonfire of regulations” – May appointed the former Labour adviser Matthew Taylor to propose an expansion of rights for gig economy workers (legislation is due to follow). The disparity between the Prime Minister’s rhetoric and reality remains considerable. But her trajectory sharply contrasts with that advocated by her party’s right (an exception is the pledge to reduce corporation tax to just 17 per cent by 2020, the lowest rate in the G20).

Only when discussing the extreme scenario of a no-deal Brexit, have May and her chancellor Philip Hammond threatened to slash taxes and regulation. “If we have no access to the European market… we could be forced to change our economic model,” declared Hammond in January 2017. But this warning – largely a negotiating tactic – was rescinded after the Conservatives lost their parliamentary majority last year.


Privatised paradise? The Brexiteers’ idea of “the Singapore model” is misconceived

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Faced with the threat of a Labour government and public weariness with austerity, the Tories no longer espouse the aim of shrinking the state but promise higher spending on the NHS (“the closest thing the English people have to a religion,” in Lawson’s description) and other public services. Far from the age of “big government” being over, voters now long for its return. The 2018 British Social Attitudes survey found that 60 per cent favour higher taxes and spending (the highest level in 15 years), while a mere 4 per cent wish to further roll back the state.

The appeal of a no-deal Brexit to libertarian Leavers is precisely that they believed it could create the conditions to impose policies unachievable in normal times (just as the 2008 financial crisis enabled austerity). One is reminded of Naomi Klein’s The Shock Doctrine (2007), in which the Canadian activist charted the rise of “disaster capitalism”: free market policies rapidly introduced in societies traumatised by natural or man-made crises.

After the 2016 Brexit vote, Leavers boasted that the UK held “the best cards” in the negotiation. But they complacently underestimated the resilience and unity of the EU27 and how Britain’s desire to “diverge” would be constrained by the need to preserve a soft Irish border. The free market revolution that Brexiteers hoped to launch now resembles a rocket that has failed to fire.

If there is a natural economic model for a post-Brexit Britain it is surely that advocated by “Lexiteers”, such as former Syriza MP and economics professor Costas Lapavitsas, Cambridge academic Chris Bickerton, economist Grace Blakeley and Harvard University’s Richard Tuck. This would entail greater public investment and state intervention, a revival of UK manufacturing and the rebalancing of the economy away from finance and the south-east of England (drawing on the “Rhineland model” of capitalism or, more radically, democratic socialism). The irony, pehaps, is that as it leaves the EU, the UK could yet develop a more European-style economy.

A free market Brexit would have been conceivable in a UK that no longer shared a border with the Republic of Ireland, that did not revere a tax-funded health system, that possessed no obligations to its desolate post-industrial regions, that had fewer tensions and a greater sense of common endeavour among its constituent nations. The Brexiteers, in short, want to govern a country that does not exist.

George Eaton is deputy editor of the New Statesman.

This article appears in the 28 November 2018 issue of the New Statesman, How the Brexit fantasy died