By Pat McFadden MP
The new prime minister prides herself on evidence-based policy making. A weekend newspaper profile quoted her saying: “I don’t just make an instant decision. I look at the evidence, take the advice, consider it properly and then come to a decision.”
What then is the evidence for the direction of our future outside the EU that Mrs May and her colleagues have set out at the Conservative Party conference?
On Sunday she indicated that her version of Brexit would mean that not only would the UK be outside the EU but also most likely outside the single market. And she set out a timescale for invoking Article 50 – the EU’s resignation clause – with no guarantee even of an interim agreement on access to the single market and the prospect of falling back on to World Trade Organisation rules, with all that would mean for tariffs and trade barriers. This is what is termed hard Brexit.
Let us consider how this would affect just one key sector. Last week the British automotive industry issued three separate warnings to the UK government about the importance of single market membership and the potential impact of getting Brexit wrong. These warnings came from the Society of Motor Manufacturers and Traders, Nissan and Jaguar Land Rover.
The reason the car industry cares so much about this is not hard to fathom. The UK has successfully marketed itself as a gateway to Europe for decades and as the single market has deepened, that attraction has grown. This has been the spur for investment, innovation and employment, not only among car manufacturers themselves but also right through the supply chain of small and medium-sized companies which service it. And what goes for cars goes for many other sectors too.
If we take the hugely successful BMW Mini, the car is made in Oxford but components for it come seamlessly from anywhere in the EU with no tariffs, no customs checks and minimal paperwork. Or, if we take the UK’s best-selling brand Ford, the car is made elsewhere in Europe but is likely to be powered with an engine made in the UK, again exported free of tariffs and customs checks. This is how modern manufacturing works – a product made in one state but with parts that may come from a number of states. Now imagine that process with customs checks for parts in and out and possibly even tariffs, then consider the effect of that on future investment decisions affecting the UK.
The car industry got the government’s answer on Sunday when the prime minister indicated she probably wouldn’t even try for continued membership of the single market. And rather than taking the sensible approach of considering immigration and economics together, she was open that the government has decided that immigration policy and avoiding supranational institutions will dictate economic and trade policy. Nationalism first, economic interests second. That is now the guiding principle for Britain’s post-referendum future.
The vote to leave the EU did not make this stance inevitable. The government could have tried to preserve the UK’s place in the single market, even outside the EU. But despite Theresa May slapping down her Secretary of State for Brexit last month for suggesting single market membership was unlikely, she now seems to be following his lead. The hard Brexiteers look to be winning the internal argument. The chancellor, head of an enfeebled Treasury, did point out in his speech that people did not vote to be poorer, but Mrs May’s argument is leaning away from him.
This post-referendum positioning is a huge decision – by far the most important the prime minister has taken since she assumed office a few months ago.
What is her economic assessment of the stance she adopted this week? Where is the evidence that the position Mrs May set out on Sunday will be better for British jobs, trade or investment? What will be the impact of leaving the single market and customs union on manufacturing with its international supply chains? Or services industries reliant on common cross-border standards? Or the UK’s world-leading creative industries which thrive on talent from many countries? And why, in the midst of all the speeches about free trade, is the government so set on turning its back on the huge free trade area of which we are already a member?
The truth is ministers look like they don’t know or care about the consequences of the position they have adopted. They have decided that limiting immigration and not subscribing to common rules must dictate everything else. The direction is being set for hard Brexit without even trying for the alternative. So despite Mrs May’s claims about her modus operandi, the irony of her positioning on this, the biggest economic question facing the country’s future, is that it has been adopted without any evidence at all.
Pat McFadden is the Labour MP for Wolverhampton South East