Sir Ivan Rogers delivered a lecture on ‘The history and origins of Brexit’ at the University of Glasgow on 16 October 2017, part of the Policy Scotland Brexit series of lectures.
The full text of Sir Ivan’s lecture is reproduced below.
The history and origins of Brexit
Thanks very much for the invitation.
Tempting though it is at this time of growing political crisis to talk about the state of play in the Brexit negotiations, and what should or will happen next, I want today to focus overwhelmingly on how we got here.
And in doing so take a long, not a short, view.
Brexit is, in my view, both a revolutionary moment and the product of a revolutionary movement, which is – and I do not say this meaning to cast aspersions, but as an assessment of political reality – highly utopian in its thinking, as well as having radical aspirations, some clearly mutually contradictory, to achieve a very fundamental change of political, social and economic regime.
For some of the main authors, those aspirations are UK specific – one might call them the Brexit in One Country advocates; for others the real goal is to catalyse a broader revolution which demolishes the post war European settlement, which they believe to have taken a fundamentally wrong turn, primarily since the Maastricht Treaty, and perhaps goes still wider than that in its desire to shape the politics of a globalised world.
The battle we are seeing right at this moment in UK politics – especially but not exclusively on the Right – is between those who say that we must be true to the real liberatory purpose of the Revolution, and that exiting the EU must be a prelude to a very different social and economic model from the one to which they believe EU membership condemned us; and those who argue, essentially on economic grounds, that the post exit destination must deliver ongoing deep convergence with the legislative and regulatory norms of the EU, if we are not to be impoverished post exit by a radical diminution in our trade and investment flows, disproportionately impacting our most competitive industries.
It is, in other words, a battle between the revolutionary logic of the romantic, optimistic Brexiteers with their vision of a country reinvigorated by the recapturing of a sovereignty they feel has progressively leeched away to undemocratic, unaccountable supranational institutions, and the economic logic of those who see the recapturing of sovereignty and the taking back of control as a Pyrrhic victory if it results in the wholesale relocation of business away from the UK, and far from being an advance for free trade – which both sides profess to love – would be the single biggest protectionist move taken by an OECD member since the Bretton Woods system started.
As is obvious, these views are fundamentally at odds.
Both are represented at the highest levels of Government. And the difficulty the Prime Minister has in saying anything detailed on the post Brexit destination she thinks best for the country, is that one side or the other probably has to be profoundly disappointed once a destination is clearly articulated. There is no available third way, which reconciles maximising market access to our biggest neighbouring markets on essentially very similar terms to now, with radical autonomy to take a very divergent approach to regulation.
Like most revolutions, this one has a very long way to run and its resolution is highly uncertain. It also has multiple origins, some of which date back a very long way.
Because advocacy of Brexit was, for many years, a minority sport, espoused by people who were mostly viewed by the political, media and mandarin establishment, as at best, mavericks and at worst, cranks, I do not think enough attention has been paid to the intellectual origins of Brexit as a revolutionary creed, or to the arguments its main proponents deployed.
By the time we came to the referendum campaign, that ignorance of the core themes of the Leave campaigners showed. For all that, like the Remain campaign, these were a disparate group, with often widely diverging reasons for wanting to leave, and widely differing conceptions of post Brexit Britain, their arguments were nevertheless in my view much clearer and better honed on the Leave side than the Remain, and had been being honed for years, indeed, in some cases, decades.
By contrast, the arguments of the ancien regime, if I may continue the revolutionary analogy, were not, by and large, well-honed or articulated.
I want to focus in the rest of this lecture on why that was. Because, in accounting for the success of the Brexit revolution, at least in getting a majority of the 2016 vote – over 17 million voters – to vote for it, one has to look at why the ancien regime was ripe to be overthrown, and why it’s defenders did or could not marshal more convincing arguments to remain.
As an ex insider and ex practitioner, policy maker and international negotiator, I also think that I can talk with greater authority on the thinking about EU issues within successive UK Governments than I can on the development and increasing radicalisation of the revolutionaries within the Conservative Party.
To be clear then, I am not trying here to provide a full explanation – no conceivable lecture could – of the longer-term origins of Brexit. I am not here to try to explain how things evolved inside the Conservative Party over the last 25 years, and how a small group to whom John Major applied the term “bastards” became the clear majority strand inside the Tory Party.
Nor am I best placed to try and give a full account of why such a large proportion of the public was so unenamoured of its own political establishment, and of the EU’s, that it chose to vote” leave”. There are many reasons for that, and I have my views, and I touch on some, but it is not what this lecture is primarily about.
I want to try and explain, as an insider who worked for Major, Blair, Brown, Cameron and May, and, unusually for UK senior officials also worked in a senior position in the Commission, how the UK moved, over the course of 20′ years+ from a position as a central player in the EU to one in which its political elite struggled to mount a compelling argument to remain in it.
My first proposition is this.
Brexit was simply not at all a sudden, unforeseeable crisis which came out of blue skies. If you read the Eurobarometer polling on whether your country’s membership of the EU was a good thing or not and then look at the UK response alongside those of the other major Member States, Britain’s line never once intersects with those of any of the others from 1998 to polling day in 2016.
One can, I think, make a strong argument that a Brexit crisis was quite inevitably coming, and had been coming for many years. Whether or not David Cameron was wise to have an in-out referendum, preceded by the sort of renegotiation he attempted on the sort of issues he foregrounded, is one thing.
He was, like it or not, clearly right to believe that the UK public’s consent to EU membership was, as he consistently put it, wafer thin.
One can argue endlessly about whether that Eurosceptic turn of British public sentiment was largely, even primarily, the fault of successive generations of UK political leaders failing to make the case for any version of membership.
What is beyond doubt is that this was not a short-term phenomenon.
A couple of quick anecdotes at that point. When I left Tony Blair’s No. 10 to join Citigroup in 2006, I was asked, soon after my arrival, by some German luminaries at the bank when Britain would finally take the plunge and join the Euro. Their proposition being – this was less than 18 months before the crisis that nearly ripped the Eurozone apart – that the UK always joined EU projects about 15 – 20 years after their foundation, after having previously declared why they would never work…
I replied then that we would not join the euro in my lifetime, and that I thought the question would, within 10 to 15 years, become whether we would leave the Union itself, because perceived second-class citizenship in a Union whose central economic project was no longer our own, was no longer palatable or defensible.
I say that not to ascribe myself prophetic powers. It was really obvious to anyone involved that, the moment there was a real first crisis for the Eurozone, the tensions between its interests and the wider interests of the Union, including players outside the EZ, could tear us apart. I will come back to this later.
Second anecdote. I rejoined Government Service, in act of bravery or folly, late in 2011. The first of over 30 European Councils I attended with David Cameron was the famous one of December 2011, when Sir Jon Cunliffe, my predecessor was still in post as UK Sherpa. That Council saw the famous Cameron veto.
This is not the place for a detailed exposition of what happened then, and in the run-up to that Council. But the dynamics of that crisis were clear. Cameron had decided that he would not permit the 27, as it was at the time, to amend the Treaties such as to permit the Eurozone members to enshrine the contents of what became the Fiscal Compact into them, unless, simultaneously, amendments to the Treaties were agreed which gave the UK satisfaction on the anxieties he and George Osborne had about the relationship between the then 17 Eurozone members and the 10 non-EZ members.
They saw the growing risk that, in the intensifying EZ crisis, that UK interests could be overridden by an organised near qualified majority of States within the Eurozone. For Cameron, the political pressure, inside his Party, but also more broadly, not to permit further EZ-specific Treaty changes, without simultaneously delivering permanent changes he felt the UK needed, had become overwhelming.
The German-French reaction to his attempts to lever open that negotiation was very clear. They basically went round him, and, a couple of days before the Council met, agreed, between Merkel and Sarkozy, at an EPP Heads meeting in Marseilles, essentially to bypass the UK and do the deal at 17, via an intergovernmental Treaty process which would not require UK ratification. That was not notified to the UK, and it only really became clear during the night of that European Council, when Cameron was not called on to speak by the European Council’s chair, Herman van Rompuy, until over 6 hours into the discussion, that the deal had been stitched up to bypass the UK to ensure we could not derail / delay the process, by latching on our issues to those the EZ leaders aimed to deal with.
And also that, contrary to his expectations, he was on his own. Other non-Eurozone members had faded away and been “squared”.
Cameron returned to the UK, turned the situation to his political advantage by making clear that he had forced the others to go outside the Treaty frameworks by blocking their use of the Treaties and of the Institutions intended to service all 27, and got, albeit quite briefly, lionised for having deployed the UK veto.
There is much more that can be said on all aspects of this. But my point is this. There was, by 2011, as the Eurozone crisis post the financial crisis started to reach its zenith, a near death experience in the EU-UK relationship, which could have ruptured there and then.
It did not. And, for all the considerable anger on both sides, neither wanted it to. But the Cameron decision to set out his intentions on the UK’s relationship with the EU in what became the Bloomberg speech of January 2013, also did not come out of blue sky. It had a history. And the history is intimately tied up with the huge tensions over the management of the Eurozone crisis, and the tremors that set off in UK politics.
For the Eurozone elite, this episode looked like the British using their existential crisis to try and push through changes in their own interests which had no intrinsic connection to the resolution of “their” crisis. Coupled with the British lecturing them from outside about the need to “stand behind” their currency and deploy the “big bazooka” – which of course Draghi arguably eventually did, to great effect, in the summer of 2012 – this looked like the Brits exploiting Eurozone crises to deliver long-standing UK ambitions to entrench City of London interests.
That is not what David Cameron thought he was doing. But it is how it appeared to Continental European elites.
For the UK elite, though, the whole handling of the crisis – and I shall come to its broader economic impacts, notably on internal migration later – this looked like the Eurozone elite subordinating the interests of non-EZ players to its own, while declaring that only institutional changes designed to shore up the Eurozone had either urgency or validity.
The issue of whether a multi-tier European Union could equally serve the needs of Eurozone and non-Eurozone members was, for the UK side, already really on the table then, as it was again, very deliberately, in the Cameron renegotiation. But it did not look as though the key Eurozone members had great interest in taking it seriously. For Cameron, that crystallised the need to deliver permanent, institutional change if he was to have a proposition which he thought he could, or would want to, sell to the UK public as to why this was a club worth staying in.
This episode is just one important illustration of my thesis that the Brexit crisis was a long time in gestation. It had very many fore-shocks over many years, as it will have very many aftershocks over many years.
And if it had not culminated in the Brexit vote in 2016, some other dramatic form of either resolution or rupture was, I would argue, inevitable, particularly in the light of the strains the financial crisis engendered in the governance of both the Eurozone and of the wider European project.
My second proposition would be that, from the outset, the UK’s conception of the purpose of the Union, differed rather radically from the view espoused by most of the elites in other Member States.
This predates 1992 – much as that date, with the crisis over the Maastricht Treaty triggered by the Danish “no” vote, the subsequent revolts in the Commons over the passage of the Bill to ratify it, which first brought to prominence the forerunners of the Eurosceptics who dominate the Conservative Party today, and the disorderly exit of the UK from the Exchange Rate Mechanism, which it had joined only 2 years previously – was an absolutely critical year in the development of the Eurosceptic movement which developed the case for leaving.
Nor is it a phenomenon specific to the Conservative Party. It was Jim Callaghan who, because of internal Party disagreements and strains, failed to join his great friend Helmut Schmidt in the development of the so-called Snake, the forerunner of the ERM, leaving the way clear for Schmidt and Giscard d’Estaing to take it forward.
Just as it was the Labour Left of the early 1980s who pushed the Labour Party into the commitment to withdraw from the European Community in the manifesto of 1983: the so-called longest suicide note in history: forerunners, one could argue, indeed sometimes the very same people, as some of today’s Labour front bench, who suspected that the European Community was a neo-liberal capitalist club which would, notably via supranational constraints on subsidies and state aids, rule out some of the Socialist measures they, like their Mitterrandist contemporaries in the radical French Government of 1981-83, wanted to introduce.
There is a long and deep tradition of scepticism about the European project inside the Labour Party too. As indeed, in all parties, it seems to me.
But the issue goes deeper than the approaches of either the genuinely deeply Eurosceptic Right or Left. As Jacques Delarosiere, the former IMF chief and President of the French Central Bank at the time of the ERM exit in 1992, when the French came under similar market pressures but reacted very differently to them, said in London the other week, reflecting on the crisis: the UK has always had a very different, more transactional, approach to its membership of the Union.
That was true just as much for Tony Blair and Gordon Brown, for both of whom I worked very closely on EU issues as for John Major and for David Cameron. That is not to argue that there were not radical differences of approach. David Cameron’s conception of the UK’s place in Europe was not remotely the same at Tony Blair’s, and the coverage which suggests otherwise is simply absurd.
Blair might have had a typically British inter-governmentalist Member State led focus on internal economic reform – of which more later – but he wanted Britain to play a central role in the development of the EU, and fundamentally believed that a trio of the Germans, the French and the British should drive it.
Cameron had no desire whatever for Britain to be “at the heart” of the European Union, had a deep distrust of the growing politicisation of the Commission and its symbiotic relationship with a European Parliament whose legitimacy he fundamentally did not really accept, and wanted the UK to live in its own outer tier, maybe with some others, maybe alone, inside the Single Market, but not committed to any further political integration unless the British public so voted.
But my point is that in their interactions with European institutions and in their behaviours in the European Council and in key Councils, they took a classically British instrumentalist, economics and outcomes driven approach. And many of their practical reform preoccupations were similar, if with differences of emphasis.
Above all, driving forward the Single Market project and deepening internal liberalisation notably by tackling behind the border barriers to trade in goods and services, was core for all British Governments from the 80s to 2016. Product and labour market reforms, the modernisation of (or abandonment of) the so-called European social model, external trade liberalisation, both via the WTO and via big regional deals were pretty largely common ground.
So, until the last few years, was the enlargement of the Union to the East and South East. So was a more effective external and neighbourhood policy, focused less on institution building and more on concrete initiatives.
For others in the EU, it would be the development and deepening of the Single Market project, from financial services to telecoms to aviation to digital services, the prosecution of a liberal competition policy on both mergers and state aids, the liberalisation of EU external trade policy under successive British trade Commissioners and the successful enlargement of the union to the east post the fall of the Berlin Wall would be regarded as the central objectives of UK policy across both major parties for the last 30 years.
That of course accounts for some of the bemusement, frustration, sometimes anger, with which the UK Government’s interpretation of the referendum result has been greeted in other capitals – or at least amongst the elites who have dealt with these issues.
This goes broader than the intended subject of this lecture but it’s worth my remarking in brief on the typical reactions of the insider EU elites first to the Cameron renegotiation agenda and now to the perceived British negotiating objectives post exit.
On the Cameron renegotiation, the sense with which I and colleagues constantly had to grapple was that here were the British, already with a complete bespoke special deal within the EU – involving a unique opt out from euro membership, non-membership of the Schengen zone, and an ability essentially to pick and choose which Justice and Home Affairs legal instruments in civil and criminal law to join and which not, wanting a still more special deal, and enshrining yet further new protections in a revision of the Treaty.
After the ruckus I described earlier over the Fiscal Compact Treaty died down, there was at least an intellectual recognition that the UK had a reasonable anxiety that its interests might get systematically overridden, notably in areas where there was a blurred line between measures necessary to protect and build a Single Market at 28 and measures necessary to protect the financial stability of Eurozone at 19, by an automatic built in majority of the Eurozone voting through its interests as a bloc.
This was in many ways the most difficult part of the Cameron renegotiation to agree, and the toughest negotiation, precisely because of the interests at stake. Inevitably, because it was technical, complex and opaque, however important it was to get right, it got almost completely ignored in the referendum campaign.
But if you had asked David Cameron or George Osborne about their biggest single policy preoccupation about staying in the EU, for most of their time in office, the answer would, rather understandably given the extent to which the EZ crisis brought the fault lines to the fore, have been how to secure a satisfactory relationship between an integrating Eurozone and an outer tier, potentially dwindling in number and weight, with us at its core.
This was the question of whether a more flexible, multi-tier European Union could be built which would permit an integrating core to build a banking union, and perhaps then elements of a fiscal union, whilst enabling a non-member of that core to exercise its full equal rights as a member of the Single Market and Customs Union.
That stress on the desirability of different member states being able to have different permanent destinations within a single Union was also behind the Cameron desire to achieve a permanent carve out for the UK from the goal of an ever closer Union. Given that the phrase as it now figures in the Treaties reads as it does because of the specific demands of a previous Conservative Prime Minister, this whole agenda posed a big challenge. I spent an enormous amount of time trying to explain to key opposite numbers what this was about.
But in the interests of trying to keep the British aboard, others WERE ultimately prepared to try and enshrine the idea of permanently different end states in a legally binding text.
There was, from the outset, frankly much less sympathy to help address the Cameron demands on resisting the free movement of people. I do not want to cover this at length here, because it’s an extremely complex story, which it’s hard to boil down, and it needs a full lecture of its own, but the key point is that what unified other leaders then, as it unifies them dealing with the UK as it prepares to exit now, is the indivisibility of the so-called 4 freedoms which underpin the Single Market project – the free circulation of goods, services, capital and people.
There is an awful lot one could say on why this indivisibility principle has become so sacred and whether it makes real economic sense. Be that as it may, it, and the principle of non-discrimination on grounds of nationality, became the key stumbling blocks to what Cameron wanted to deliver, to demonstrate to the public that it was possible to deliver stringent controls of the free movement of people, and control UK borders, whilst remaining within the Single Market.
On that, whatever else, the referendum outcome showed the public was unpersuaded. And all the evidence suggests that this was a central reason, perhaps the central reason, why Leave won the vote.
But for others, the very demand suggested that Britain, always perceived as perhaps the main architect of the whole project of a deep, liberal Single Market project, with its 4 underpinning freedoms, had gone cold on the idea.
And further that the British, having championed the enlargement process, argued for its speeding up, and for the fullest possible enlargement to the East, and then having decided, unlike most others Member States of the former 15 members from the West, for the immediate opening of its labour market to workers from the new countries that were joining, had gone cold on that idea too, and was now regretting its enthusiasm for enlargement, and reversing its policy settings.
As we scroll forward to the negotiations under way now, the perception elsewhere, for all that the PM has acknowledged the indivisibility of the 4 freedoms and used that to indicate her acceptance of the need to leave the Single Market, is that the UK ideally really wants to benefit to the maximum degree possible from the other 3 freedoms, and to continue to have the same level of market access as if it had not left the Single Market; but insists on ending the 4th freedom, and insists on ceasing to live under the jurisdiction of the CJEU, without the acceptance of whose jurisdiction, there cannot for others, be the benefits of membership on offer.
To the bulk of the elite circles in other capitals and in Brussels, this British “have your cake and eat it” approach indicates that British politicians have now gone beyond even the transactional, case by case, economic advantage, Single Market only policy they always associated with the British throughout our membership, while ceasing to offer a defence of the pure economic benefits of membership.
And the biggest puzzle for those elites – all the people in key capitals I know best and have worked with on and off for the last quarter century – is that they look at the EU of today, and its economic direction, and they think the UK has, if anything had a disproportionately great and decisive role in setting its economic policy direction.
Yet it appears to be precisely over issues arising from the driving forward of the Single Market and internal migration issues arising from the early radical enlargement for which the UK pushed more than any other member state, that have tipped us out of the whole project.
To have the erstwhile champions, over 30 years, of deepening and completing the Single Market saying now that it is impossible for them to stay in it at all, and to have the erstwhile champions of rapid, generous large-scale enlargement, including into the Balkans, say they cannot live with the necessary consequences of integrating those States into the Single Market, causes some amusement and some schadenfreude, but mostly just consternation and intense frustration.
That is why we start the Brexit negotiations from a position in which others view the UK’s decision as an existential threat to the integrity and survival of the project, and with a pretty strong tide running that the UK, in leaving, must really face the real consequences of departing the club, and not imagine it can continue to have all that it likes about market access on special terms, deriving from 3 of the 4 freedoms, whilst simply ending the fourth because it has become politically unsustainable at home.
The strong sense I have from former colleagues and friends who, like me, have lived at the sharp end of EU negotiations – inevitably of course in a technocratic insider elites bubble – is that they think the British political elite largely surrendered to the revolutionary pro Brexit forces by failing, not just over recent years, ever really to make the case that could have been made to persuade the British public to remain.
The Brexit revolution won, in other words, essentially because the British elite largely gave up, compromised with and pandered to, populism of both Right and Left, and surrendered the field to a case they knew to be basically specious, but did not have the energy to combat.
To a great degree, of course, this is a very comforting view for the bien pensant elites in Brussels and key capitals, as it makes the Anglo Saxon political elite comfortingly different from themselves – always a reassuring thought at a time like this!
Here are those Brits, who only ever tried to sell a version of the Union which was purely mercantile, without any solidarity and without any passion, and ultimately it was the very thinness of that vision that “did for” them, because they could no longer explain to their public why it was worth bothering to be in.
And now the morality play: they will now discover from the outside why being in was indeed critical to their economic success, and why even their etiolated free trade only vision of third country relationships does not work when you leave the mother ship of the EU trading bloc.
I caricature. But only a bit.
Is there though something to this account? Did the revolution of 2016 succeed because the defenders of the ancien regime could no longer mount a defence of the ancien regime that worked even in their own world, despite living in a version of the ancien regime which was already bespoke to themselves, and which they had vigorously argued for and constructed?
This is a big question, and I think it is one that will bear and get a great deal of examination in the decades ahead. It is far too early to attempt to write a serious history of how Brexit turned from a minority obsession into something for which a majority of those going to the polls voted. But I think one can nevertheless try and outline some areas in which the UK’s political elite ceased to make or to be able to make, a compelling case to remain in the EU.
The brilliance of the Leave campaign was that it fused several different themes under the rubric Take Back Control which reconciled and unified people with very radically different perspectives on what a post Brexit Britain should look like.
To remind, in case you need it…
It mobilised most obviously the case for national control of borders, the ending of free movement of people and the fear of the immigration consequences of any future enlargement if we stayed.
It told people that the net contribution was bigger than it was, and that once recovered, it would go to the NHS – though many of the brains behind the proposition themselves favour the end of the NHS…
It told small and medium sized businesses that the Single Market was basically a racket that benefitted solely the large incumbents.
And that, post exit, the burdens of EU regulation could be eased radically even on firms exporting into EU markets: obviously not a runner.
It said that the same levels of market access could and would be achieved by a purely free trading agreement from outside the EU as had been achieved as members of the Single Market and Customs Union.
And this would be so, despite the UK ceasing to make its budget contributions, ceasing to apply supranational law and ceasing to live under supranational jurisdiction, because others would not cut off their nose to spite their face, and had more to lose than us.
If we go through each of these, one can see the extent to which the foundations of the case to remain had been undermined.
Public concerns about the impact of free movement internal migration stemmed from the impact of enlargement to the Accession countries – 8 entrants in 2004 and Romania and Bulgaria in 2007. This was, let’s not forget, an enlargement unlike all previous enlargements, to a group of countries, impoverished by Communism whose per capita GDP was mostly between a third and a half of the prosperous West. There was, in other words, a massive incentive for people who had lived behind the Iron Curtain, to take up opportunities to go and better themselves and their families’ living standards, by taking work in the old West and be paid vastly better than they could be at home for the next generation.
It was the media storm over the end of the 7 year transition periods on free movement for the latter 2 that opened the year 2014, by the end of which UKIP had won the European Elections in the U.K. And 2 UKIP MPs were in the Commons. That of itself rendered the Bloomberg speech from Cameron, with its conception of pan EU reform, in part obsolescent before the 2015 election.
No programme for the renegotiation could possibly succeed unless it decisively addressed the borders and free movement issue.
But let’s track back to 2004 when Blair took the decision to open the UK Labour market without any transition period to the citizens of the A8, and you have a decision – I was there, I know…- taken on both moral and domestic macro-economic grounds. None other than Mervyn King at the Bank of England, was personally pushing hard the need to address skills shortages and bottlenecks to head off the risk of inflation. The UK economy appeared to be powering ahead. The financial crisis was not even a man’s hand cloud on the horizon.
But this was a policy on borders and free movement driven by the perceived need to address those shortages and to try and drive the UK’s trend rate of growth higher. No -one then predicted anything like the level of take up of free movement rights we saw. Internal forecasts of the numbers who would come from the new Eastern European accession were very low. In retrospect, they appear absurd. Out by an order of 50 or more.
I recall consequently very little thinking or preparation for the potential consequences in terms of access to public services and housing of the advent of hundreds of thousands of Eastern European workers.
The second consequence of enlargement which was buried in public debate at that time was the net cost to the UK of disapplying the UK Abatement – the famous rebate – to structural funds spending in the East.
The effect was, again inevitably, not through artifice, back-end loaded into the end of the following budgeting period – in other words, the main effect not materialising until after the election that took place in 2010.
But the effect was very large. A net contribution which had bounced around 3 to 4bn sterling moved to nearer 8 – 10bn. Not the 350 million on the side of the bus. But a very appreciable year on year increase at a time which proved, after the financial crisis which no-one then foresaw, to be one when all other Government discretionary budgets were being squeezed.
My point is not that the UK political or mandarin elite became less keen on enlargement or abandoned it as a political project.
But that the 2 visible consequences of enlargement over the 10 years after the biggest ever wave of it happened were the huge influx of skilled and unskilled labour into the UK Labour market over a time when, post financial crisis, middle and working class living standards came under an unprecedented squeeze.
And secondly the near tripling of the UK’s contribution to an EU which appeared, in all other respects fundamentally unreformed. Blair talked about quite radical further reform of the CAP. But at best incremental changes were achieved. No radical reform. The two phenomena inevitably came together in popular political discourse.
The case for enlargement, always seen by the British elite as central to its conception of what the EU was for, was never really made to the public. Perhaps it was unmakeable. But by the time of the referendum and the rather extraordinary, and I would argue disreputable, claims made about the numbers of Turks who might be arriving should Ankara, after a mere 50 year wait, join, this was no longer a case which could be advanced to the public expecting a positive reception.
In short, enlargement had ceased in any way to be a strategic plus in a debate about whether to stay. And on money, though Cameron very successfully defended the UK rebate and screwed down the budgetary ceilings – I would argue, though I am clearly biased, that he was probably the most effective budget negotiator since Thatcher in 1984 – there was no credit to be had for having achieved the maximum he could. And the consequences of the previous budgetary negotiation led to opponents being able to quote serious numbers for the costs of membership.
What then of the UK’s other perennial central objective as an EU member: the deepening of the Single Market as a means of tackling barriers to cross border trade in industries in which UK companies stood to benefit heavily from an ever bigger home market and its liberalisation?
There is a great deal one could say on this covering the last 25 + years. But here I can only make a few points in rather simplified fashion.
First, I would say that UK Government enthusiasm for the reality of the Single Market frequently was often rather more rhetorical than real under all Governments I worked for.
In part that was due to a sense, sometimes justified, that the potential benefits of behind the border liberalisation were being squandered by an excessively harmonising approach from the centre. Too much harmonisation. Too little use made of a mutual recognition principle which avoided the need for excessive harmonisation. But in part it was because the UK, like many others, had vested interests which opposed moves which weakened the position of those vested interests in domestic somewhat protected markets.
Second, from the very outset, Mrs Thatcher and her supporters were wary of the extent to which Lord Cockfield, the British architect of the immense Single Market programme, whom she nominated as Commissioner, which delivered the Single Market in 1992, had, as she put it, gone native.
There is, to be crystal clear, no way to build a genuine Single Market, as opposed to a Free Trade Agreement, which is a really much less radically trade liberalising agreement, without both a single Court having ultimate jurisdiction, and a supranational rule book, which itself could never be close to being completed without a massive move to voting by qualified majority, as opposed to by unaninimity. You never build a Single Market on unanimous votes: there will always be someone to block each step.
The unease about the sovereignty implications of both was there from the start.
And the emphasis on the defeats or setbacks, and the occasions when the UK lost in the Council, as opposed to the many more occasions when the UK was in the majority undoing others’ national preference barriers, was also there throughout my time working on Single Market dossiers.
Third, whatever the theoretical appeal of Single Market liberalisation as the key economic agenda of the British in Europe – and there was some from Major to Blair to Brown to Cameron – there was always a British attempt to privilege inter-governmental non-legislative routes to EU reform, and frequently an attempt to privilege the concerted national over the supranational reforms. I think of the Blair attempt, with Aznar, in early century, to develop the so-called Lisbon agenda, and the open method of co-ordination as the new non-Monnet method of delivering structural reforms. This was a sort of OECD style peer review and benchmarking method to avoid prescriptive legislative approaches.
But Brown had his own, more systematic efforts via his repeated Economic Reform annual White Papers.
And Cameron, when it came to Bloomberg, though he repeated the emphasis on both internal and external trade liberalisation, pleaded for the EU to exhibit more of the “the flexibility of a network, not the rigidity of a bloc”. This phrase was always somewhat mystifying to my EU colleagues, who thought it was a classic elegant British desire to miss the entire point of the EU….!
The EU is an extraordinarily complex legal order and edifice, or it is nothing. It has intergovernmental elements and national leaders are critical to its success or otherwise. But it is a law making and law infested organisation… We always had the greatest difficulty facing this reality. This Government still does now.
Fourth, in the same vein, post the Lisbon Treaty, and the wholesale move to the so-called Ordinary Legislative procedure for the passage of legislation, UK governments became, I think, even less comfortable – much less comfortable – with the democratic legitimacy of the process and above all, with the ever greater role of the European Parliament.
For the Tories under Cameron this anxiety about the Parliamentarisation of European political and legislative life was enhanced by their decision to abandon the European People’s Party on the centre right and build their own Party. It never had anything approaching the institutional weight of the EPP, nor did they outside it, having been major players within it. The events I described earlier at Marseilles in 2011 simply could not have happened in that fashion had the British PM been present in the EPP leaders’ room.
The discomfort over the growing institutional weight of the Parliament had grown progressively from the mid 1990s and perhaps culminated with the election of Juncker as President of the Commission via the so-called Spitzenkandidaten process. No British Minister in the Coalition Government or in the opposition – including the ex MEP, Nick Clegg – felt this process was legitimate. None felt comfortable with the politicisation of the Commission as an institution, and its proximity to the EP rather than the Council.
Finally, as I alluded to earlier, the reality post the financial crisis was that we discovered that the Single Market in Financial Services, always one of the key agendas for U.K. Governments, had, even if it had, patchily, delivered the substantial Europeanisation of some services markets, also delivered greater financial instability, because supervision and resolution regimes, and taxpayer backstops had remained entirely at national level.
But the work to repair this and put supervision, resolution and ultimately, deposit guarantee schemes on a firmer footing, was an agenda for the Eurozone, not the Single Market at 28.
The UK interest, as on much else post the financial crisis, became to insulate ourselves from all potential liabilities and to ensure that our own regimes, which were, as we all know, put under the most severe strain, at huge taxpayer cost, by the huge crisis in our own banking system, were kept intact and free from emerging EU structures.
We profoundly wanted Banking Union to be built and to work. We did not ever want to be part of it. We faced, as a country with a radically different banking system and far deeper capital markets than the core Eurozone countries, were different challenges from them. Nor could one have explained any other decision than staying out of the Banking Union, to UK taxpayers…
What do I conclude from this thumbnail account of British Government’s rather equivocal and waning enthusiasm for the only project at EU level about which we had ever been enthusiastic?
I think the following: that the traditional planks of British enthusiasm, such as there ever were, about membership of the EU had weathered badly over the last 2 decades.
That the popular case for enlargement, a classic Jean Monnet style elites project, had never been made, and became politically unmakeable successfully after the financial crisis and the economic near collapse of parts of the South further added to flows into the U.K. Labour market.
That the Single Market became, for Treasury, Bank and senior politicians rather a sideshow post financial crisis, and the tensions and fissures between things best done at Eurozone level and those still best done at 28 made a proactive UK agenda here largely unviable for years.
That the rise of the EP, in which the UK felt it had a modest voice and about which it was, for understandable reasons, connected with our much longer, more successful experience of Parliamentary sovereignty, radically more sceptical than Germany or several other Member States, made Single Market liberalisation agendas harder to prosecute and less likely to come out close to UK objectives.
And more broadly, that, post the Eurozone crisis and the extraordinary welter of institutional developments which it spawned, the UK political establishment’s main objectives in the EU, from money, to external migration and asylum and the securing of Schengen borders, to the avoidance of taxpayer liabilities which belonged to the Eurozone, became essentially defensive ones. Preserving carve outs and opt outs, avoiding liabilities, building firewalls against contagion.
That was not just a Cameron stance, it was a much longer-term response to Institutional and Eurozone developments which changed the entire nature of the club.
Cameron chose to try and win the referendum on a ticket essentially of “trust me, I am not an enthusiast for the institutions, processes and structures of this place, and I do not intend to join the rest on the journey to which most are committed. But I assure you, it is better to be just inside the fence – inside the SM and CU – rather than outside”, with all the downsides of third country status which only now are having into view.
I think it’s not at all surprising that this prospectus lost in the circumstances of 2016.
But I do not think that, from outside the Eurozone, outside Schengen, and with an equivocal attitude to the further deep integration happening in Justice and Home Affairs, another, vastly more enthusiastic stance, would have been available to any UK PM. The key challenges facing the vast bulk of the EU’s members revolved around Eurozone governance and about an external migration crisis to which, with no British Government advocating Schengen membership, solutions at the EU level never could have the UK as a truly core participant.
Cameron’s position though – to try and stay inside the outer perimeter fence of the EU, within both Single Market and Customs Union, and indeed the Common Commercial policy – but to steer clear of any other steps towards political integration, and to demarcate the UK’s category of membership from others’, did not persuade a majority of the public.
So where, in brief are we now?
As I said at the beginning, with an unresolved deep conflict at the heart of the British Government’s position.
The reality of the Government’s position is that there is, medium term, agreement on a hard Brexit. There is, as President Tusk said a year ago, in any case no genuinely soft one. Certainly not without a massive shift in Government red lines.
The positions on the control of borders, the desire to make our own laws and not be subject to supranational ones, to escape the jurisdiction of the ECJ, and the desire to have an autonomous trade policy, and not remain in the Common Commercial policy, mean, very clearly, that we are leaving both the Single Market and the Customs Union. On that, there is no disagreement at Cabinet level. All the 27 know that to be the position.
The stark division, within the current Government, is over what the destination is.
On one side, there are those who, with the option of staying just within the outer perimeter fence having been lost, see it as essential on economic grounds, for both key manufacturing and services industries, to be just outside that fence, and seeking long term high alignment and ongoing convergence with, the regulatory and legislative norms of the EU. They see any other course as potentially deeply damaging to the UK economy – and public finances.
On the other, there are those who say we did not win our freedom from the shackles of the EU in order to tie ourselves reasonably closely to it in perpetuity. They see remaining near the regulatory orbit and model of the EU as an historic missed opportunity, and a betrayal of the revolution they believe they won, and that was necessary for the country.
There is no reconciling those two views. Nor, I think, some elegant third way to be found between them, though of course I make the distinction very stark, when there are some genuine nuances.
For the 27, the decision to leave both the Single Market and the Customs Union inevitably takes the UK further out than Norway, which is in the EEA and Schengen and pays a sizeable per capita sum into EU coffers; than Switzerland, with its lattice work of over a hundred legal agreements; or even than Turkey, which has surrendered a serious amount of trade policy autonomy in order to have a deep Customs Union with the EU.
For key capitals and for Brussels, the consequences of our inability to meet the level of obligations the Norwegians and Swiss are prepared to take – on laws, on money and on free movement – are clear. Our level of access to their market has to see commensurate diminution.
The model of large scale continuity of access at current levels despite not taking on those obligations, is not – cannot be – on offer. That, for them, is not punishment, vengeance, spite or whatever else. It is an automatic consequence of the decision to exit, and of the consequences the British side has drawn from the referendum.
That, in a nutshell, and cutting through the endless noise over the very important withdrawal issues of citizens’ rights, the financial settlement and the Irish border, is the negotiation ahead. Whether that negotiation succeeds at all, and, if so, what success might consist in, is beyond the scope of this lecture. But both sides approach it with a lot of historical baggage which we need to understand, and understand each other’s perceptions of, if we are to get, without massive shocks, to a post Brexit relationship of genuine partners, as opposed to a long, cold divorce and a fitful, gradual, decades-long thaw.
Image credit: Flickr | threefishsleeping (CC BY-NC-ND 2.0)