Brexit, British Government, Conservative Party, Single Market, Theresa May

Theresa May is no Thatcher

This blog was written on Oct 7th 2018

3670fad000000578-3700341-former_prime_minister_margaret_thatcher_during_an_exchange_at_th-a-1_1469057484354.jpg

Some old political speeches are worth re-reading. Time puts them into perspective. Did they call it right on the day? Did they offer leadership when leadership was needed? Or, were they self-serving, crafted to play to the baser instincts of a partisan audience, written simply to advance a political career?

A speech that has stood the test of time is the one delivered by the then prime minister, Margret Thatcher, at Lancaster House thirty years ago on April 18, 1988.

Thatcher was there to launch a campaign whose aim was to get the country and business ready to seize the opportunities that the imminent creation of the EU’s Single Market would present. Yes, the same Single Market that today’s UK government insists it must leave.

You can read it in full here: https://www.margaretthatcher.org/document/107219

Drawing attention to the new Single Market of 300 million people, Thatcher opened by asking her audience “(to) just think for a moment what a prospect that is”.

A Single Market without barriers—visible or invisible—giving you direct and unhindered access to the purchasing power of over 300 million of the world’s wealthiest and most prosperous people. Bigger than Japan. Bigger than the United States. On your doorstep. And with the Channel Tunnel to give you direct access to it. It’s not a dream. It’s not a vision. It’s not some bureaucrat’s plan. It’s for real. And it’s only five years away.

She went on to explain how the Single Market would differ from a customs union, which is what the EU had been since its birth in the late 1950s.

Despite the existence of the customs union, “Europe wasn’t open for business”, she argued. For underneath all the “lofty” rhetoric about Europe

… barriers remained. Not just against the outside world, but between the European countries. Not the classic barriers of tariffs, but the insidious ones of differing national standards, various restrictions on the provision of services, exclusion of foreign firms from public contracts.

With the creation of the Single Market that was going to change. It was Britain that had “given the lead” in making it happen:

Action to get rid of the barriers. Action to make it possible for insurance companies to do business throughout the Community. Action to let people practice their trades and professions freely throughout the Community. Action to remove the customs barriers and formalities so that goods can circulate freely and without time-consuming delays. Action to make sure that any company could sell its goods and services without let or hindrance. Action to secure free movement of capital throughout the Community.

The Single Market would not just work for business and industry, she declared. “We are putting the European Community to work for ordinary people: for cheaper air fares, for more and better services, for consumer choice and product safety.”

She concluded by telling business that by “1993 Europe will be our home market. That means that we won’t just be exporting to eleven other countries. We will be doing business in a single domestic market… Above all, it means a positive attitude of mind: a decision to go all out to make a success of the Single Market.”

I was never a fan of Thatcher nor a believer in “Thatcherism”. I come from a very different political space. My space is that of Brandt, Mitterrand, Delors, González, Fitzgerald, Jenkins, Blair and all who worked to build an open, inclusive Europe, economically dynamic and socially progressive.

But when it came to the European Single Market Thatcher was right.

Since 1992 the UK has not been “exporting” to Europe. It has been selling into its own home market. It is as easy to send a Honda made in Swindon or a Land Rover made in Solihull to Berlin or Budapest as it is to send them to Birmingham or Brighton. It was the creation of the Single Market that rescued the UK car industry from near oblivion after it had come close to destruction as a result of madcap labour relations in the 1960s and 70s.

Compare Thatcher’s words from all those years ago with May’s 2017 Lancaster House speech. The centrepiece of May’s speech was her announcement that the UK planned to walk away from the Single Market and negotiate a replacement trade deal:

So as a priority, we will pursue a bold and ambitious free trade agreement with the European Union. This agreement should allow for the freest possible trade in goods and services between Britain and the EU’s member states. It should give British companies the maximum freedom to trade with and operate within European markets – and let European businesses do the same in Britain. But I want to be clear. What I am proposing cannot mean membership of the Single Market.

By definition, a trade agreement with another country (or bloc of countries) will never offer the same benefits as an internal “home” market.  May’s Lancaster House speech took the UK out of Thatcher’s Europe-wide “home market”. To the best of my knowledge, this is possibly the first time in history that any political leader has proudly announced that they intended to shrink their home market and follow that up by seeking a worse deal with their major trading partner than they now had.

Let me ask a question. How can any politician wake up in the morning, look in the mirror and see their reflection saying back to them that their policies will make their country worse off than it otherwise would have been?  They know it to be true.  But they still do it. “O coward conscience, how dost thou afflict me!”

Thatcher offered business an immediate, here-and-now market of over 300 million, already in the process of being constructed. You could reach out and touch it. That market has now grown to over 500 million.

By contrast, May’s speech was full of the imagined wonders of Global Britain, flights of fantasy, our best days are before us. But no hard numbers. No road map for business. Tinkerbell economics. Believe and it will happen.

In deciding that leaving the EU meant leaving the Single Market and the customs union, the UK government is rolling back all that Thatcher had achieved and is opting for a smaller home market than it currently now has. How long will Honda, Nissan, Land Rover and the others stay in the UK when the UK’s “home market” is slashed from 500m to 65M?

Senior motor industry executives have already begun to say publicly that they will go. Carlos Ghosn, the chair of Nissan, has described its British operations as “a European investment based in the UK”, which employs almost 8,000 people, mostly at its factory near Sunderland. A further 30,000 people are employed in UK companies supplying Nissan.

In a statement to the Guardian authorised by the main board in Japan, Nissan said: “Since 1986, the UK has been a production base for Nissan in Europe. Our British-based research and development and design teams support the development of products made in Sunderland, specifically for the European market.

“Frictionless trade has enabled the growth that has seen our Sunderland plant become the biggest factory in the history of the UK car industry, exporting more than half of its production to the EU.

“Today we are among those companies with major investments in the UK who are still waiting for clarity on what the future trading relationship between the UK and the EU will look like. As a sudden change from those rules to the rules of the World Trading Organization will have serious implications for British industry, we urge UK and EU negotiators to work collaboratively towards an orderly balanced Brexit that will continue to encourage mutually beneficial trade.”

As I write this Briefing newspaper reports are suggesting that May is turning her customs union “red line” into a very light shade of rosé and will propose that the UK continue in the EU customs union as part of the Irish “backstop” arrangement.

If this is true, then it is goodbye to all those swashbuckling trade deals that the Brexiteers have been using as a major raison d’etre of Brexit. But we shall see. In these matters always best to treat what you read in the UK press with a very large grain de sel.

But if the UK were to stay in a customs union with the EU and so unable to negotiate its own trade deals, then the one “benefit” left from Brexit appears to be the ending of free movement. Ending free movement is the UK pulling up the drawbridge to the free movement of European citizens into the UK. I put the word “benefit” in inverted commas because it is extremely dubious if ending free movement is any sort of benefit.

According to the Economist “…the average adult migrant from the European Economic Area yielded £2,370 more for the Treasury in 2017 than the average British-born adult did.” I suppose all the Brexiteers can say is: “Stop them coming. They are embarrassing us by contributing too much.”

Further, most Britons do not realise that ending freedom of movement cuts two ways. If it becomes more difficult for Europeans to come to post-Brexit Britain the it is going to be more difficult for Britons to go to Europe. Business trips to Paris or holidays in Benidorm will require more preparation, more paperwork and will cost more. Retirement to the sun will be a lot more complicated.

Many of the readers of this Briefing work for multinational companies. Imagine the scene. Your CEO calls you in to give her an update on Project Brexit:

CEO: Joe, you’re the one who championed Project Brexit. You told me it would be easy, that there would be big costs saving, no downside, and that we’d have lots of new customers signed up by now. You assured me that when it came to negotiations with existing customers we held all the cards. So, where are we, now that we’re eighteen months in and just six off the deadline? I have a conference call with the analysts in the next few days. Tell me something that makes me happy.

Joe: Boss, given the objectives of Project Brexit, it’s going extremely well. We are taking back control. I’ve managed to devise ways of putting sales to about 85% of our existing customers at risk. I’m happy with this because these customers are holding us back from exploring new and greater opportunities. As long we keep selling to them we will never go global.

In the future there will be a lot more paperwork involved in processing deliveries. Of course, we’ll have to hire people to manage all this extra administration and that will be a big cost that we haven’t had until now. I’ve also told our customers that in future we may not manufacture to their required standards, but they can trust us as the stuff will be OK.  They said they’d get back to me on that. But I’m hopeful. Hey, freedom always comes at a price.

As for new customers, well, I’ve had to prioritize negotiations with our existing customers on our new terms and conditions. To be honest, I’m sort of surprised that they keep coming back to me saying that what we want won’t work. They are showing no imagination or flexibility. They appear to be obsessed with cake and keep talking about cake and eating it. Especially cake with cherries. Must be a European thing.

Also, they seem to be working together, acting as a team. They’ve hired this super smooth Frenchman to front for them. I just can’t get around him. That wasn’t in the plan.

So, because I’ve had to dedicate so much bandwidth to our existing customers, we have no new customers for the moment. But its looking good. Most of the potentials I’ve spoken with have told me that when they know where we stand with our existing customers they’d call and we could do lunch. Apparently, that’s what they say in Hollywood when they are lining up a big deal. Let’s do lunch. The Americans have even offered to host a formal chicken dinner. They say we’d like the way they do chicken.

I’ve also been working on new rules for our operations guys as to how they hire the people they need to work in the plants. New hires will have to meet tough, new criteria that we will decide unilaterally. We may run into some bottlenecks in getting the numbers we need and production targets could be hit. But all those we hire will be fully signed up to our core values. Big win that. A Project Brexit deliverable. Less is more I always say.

Finally, I am well on the way to convincing our customers that we don’t need those benefits we got as part of the deals we had with them. For example, if one of our people was visiting with a customer and they got injured or fell ill the customer’s guys organised medical treatment for them. That will go when the new arrangements kick in.  Hey, we Brits can stand on our own two feet, even when we fall down ill.

They also recognised our ID cards at their gates and just waved us through. I’ve told them that Project Brexit means that we will be happy to queue like others. Just think of the emails our people could send to potential global customers as they are held in a two-day queue.

To sum it up. It is turning out to be a lot more complex than anticipated. Looks like costs could exceed benefits by a wide margin. We’ll be short of people in the plants and revenues will be hit. There is a high risk of losing existing customers and we might struggle to pick up new ones. But it’s worth it because we will have taken back control. We’ll feel so much better for that and I’m proud to be leading Project Brexit.

I suspect that any executive who delivered a report like that would, five minutes later, be sitting in the back of a taxi on the way home working out in their head how to update their profile on LinkedIn, drawing particular attention to their immediate availability.

What rational business decides to walk away and put distance between itself and its major customers because some people, who never negotiated a business deal themselves, told them there were El Dorados somewhere over the waves?

Not any business that I know, and I know some of the biggest multinational companies in the world.

As my French neighbours say: Les Anglais sont fou.

3 thoughts on “Theresa May is no Thatcher

  1. Another interesting and entertaining look at this fiendish puzzle of Brexit. Thank you Mr Hayes!

    What strikes me above all when comparing the two speeches quoted, is the extensive reasoning underpinning the Thatcher one. Agree or disagree, at least she made it clear why she was advocating taking a particular course.

    With Theresa May, it often feels like we’re back in the times of “Kremlin-watching” during the Cold War, where the motives and plans of the leaders had to be deduced from tiny clues picked up by people specialising in reading those particular runes.

    To my knowledge, May has never set out clearly what made her change her mind from being a rather tepid Remainer to extreme Leaver (although it was always clear that unless the leaving was extreme, there was really no point in leaving at all). All we hear is what the various factions around her are thinking.

    This is troubling for a number of reasons. First of all, it opens up a vacuum where leadership should be. This is then filled by whoever is minded to take the bit between the teeth for a while, whether it’s Fox, Davis, Johnson, Rees-Mogg, Hammond, or really anyone within reach of an open mic, resulting in an advocated direction of travel that lurches wildly between divergent points of the compass.

    Secondly, it is disastrous from the point of view of transparent government. This is particularly important at this juncture, as there is a tremendous amount of suspicion on all sides as to the motives of those in charge.

    Leavers to a large extent saw in the Brexit vote their only chance of influencing the way the country was being run, which was mostly to the advantage of those in power and those with the means of taking full advantage of all the possibilities that membership of the EU had to offer.

    As a (former?) Remainer, Theresa May is in danger of being seen by Leavers as a representative of those who would want things to stay as they were. Already in the comments sections of various newspapers there are Leavers who are arguing that as she was never a committed Leaver, she is happy to betray those who voted for it. They feel that the current shambles, rather than a natural and predictable result of the Brexit fantasies colliding with political reality, is actually down to her unstated desire to preserve the status quo.

    If she had been more open and honest about the various risks associated with leaving, and the limited nature of the concessions that the EU legal framework would permit Barnier to make, these accusations would never stand a chance of gaining traction. Then again, if she had been honest from the start, she might never have become Prime Minister.

    Remainers, on the other hand, suspect her of wanting to stay in power for its own sake, of being still obsessed with immigration targets, or wanting to keep the Tory party from splitting, in short, of any motivation other than wanting what’s best for the country. All this would be mitigated by clearly setting out the reasoning behind her plans and red lines, as in fact the EU has done from the start.

    Many questions remain. How firm is her grip of EU law and the UK-EU relationship? Is it as tenuous as those of Fox and Davis appear to have been (“easiest deal in history..”)? Does/did she actually know that the ECJ is not the same as the ECHR? Did she know what she was signing when she agreed to the Irish backstop?

    How does she think she’ll be able to reconcile a predictably underwhelming deal with all the promises she’s made as well as those made by others that she’s left unchallenged? What will she say to the JAM’s when the inevitable economic consequences of any Brexit start to bite? Has she always been aware that most of the problems leading to the Brexit vote were products of Westminster, rather than Brussels, policies? If not, why not?

    The dialogue you sketch between CEO and project manager is, however absurd, horrifyingly close to present-day reality in British politics. We live in perplexing times.

    Liked by 1 person

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s