Reader vlade e-mailed about a Richard North blog entry on Parliamentary testimony on the impact of Brexit on the auto industry. North found the content of the reports, the incomprehension and lack of inquisitiveness by the MPs, and the lack of press interest, all to be deeply disturbing. Recall that North was and is a Leave backer who nevertheless has been chronicling the mess that Brexit will be while occasionally telling his readers it will be worth the ten years of pain that he anticipates.
North complains in his post that in addition to the MP leading the inquiry, Labour’s Rachel Reeves, being visibly clueless, matters were not helped by the auto experts underplaying the seriousness of the issues and bizarrely offering false hope, like the usual UK default “Surely there is a way out” which was further watered down into the handwave that the UK had to “find a way to bridge that gap.”
As we’ll explain, the bottom line is that the UK auto industry is going to take an even bigger and faster hit from Brexit than I anticipated, and it will occur as a result of the UK losing access to the single market, so the damage will be serious even if the UK manages to reach a Brexit agreement.
As vlade and I discussed via e-mail, some of the key points are very technical, and so I may fall afoul of buzzword compatibility and/or in the reading of some of the mechanisms. Nevertheless, just as one could conclude “CDOs are very risky and look like they are going to create even bigger losses for banks” in 2008 without knowing how they were structured, here the high level conclusion, the UK auto industry will take a big hit as a result of Brexit, seems to be well founded.
Automobiles and auto parts account for roughly 12% of UK exports. As you can see from the table below, from the written testimony of the Society of Motor Manufacturers and Traders, the EU is far and away the most important destination:
The Importance of Approvals in Global Supply Chains
We’ll start with North, who has some experience on this topic, having written on it in with respect to the UK-Korea trade agreement. From his post:
As [Patrick] Keating [Government Affairs Manager, Honda Motor Europe] explained, the “real risk” to the car industry will be triggered not in the event of a “no deal”, but “as the UK leaves the Single Market”. When this happens, the type approvals issued by the VCA, the UK Vehicle Certification Authority, will either no longer hold validity or not be able to be extended.
This technical jargon conceals a life-or death issue for the industry. For Honda, all the vehicles manufactured at its Swindon plant – with a huge proportion exported to Europe – are approved by the VCA which means that, post-Brexit, their products will no longer be cleared for sale in EU Member States.
This will also apply to all other vehicles approved in the UK, effectively bringing export sales to a complete halt, until such time as the vehicles can be submitted to an EU Member State approval authority, and gain new certification. And that won’t be easy or quick..
It is almost certain that the UK, having acquired “third country” status by virtue of having left the Single Market, will have to submit its products for type approval again, before they can be sold. There will be no recognition of third country approvals.
The Society of Motor Manufacturers and Traders discussed the approvals issue in its written testimony, sadly buried starting at Item 33 (emphasis ours):
Once all of the systems and component have been approved, the vehicle will be considered as a whole by a designated approval body, who gains its authorisation from the EU; in the UK, this is the VCA…A successful inspection accompanied by the submission of the relevant manufacturer’s information documents will result in the issue of a European Community Whole Vehicle Type Approval Certificate. This certification will be accepted throughout the EU without the need for further testing until the design of the vehicle changes.
The vast majority of manufacturers in the UK use the VCA to obtain approvals to the EC Directives and Regulation and have long, established working relationships with the VCA, which help increase the efficiency of the approval process. The certification process normally takes between 6 to 18 months for manufacturers to obtain a European Community Whole Vehicle Type Approval Certificate and manufacturers can begin initial their initial discussions with the approval authority between 3 and 10 years prior to the formal certification process…
The issue over the validity of existing approvals is vital because if this is not agreed, manufacturers would have to replicate their whole vehicle type approval with an approval authority based in another EU Member State. This would result in significant cost, negatively impact UK manufacturers future plans and undermine their technology implementation timetables, as gaining new approvals automatically make a vehicle a new type and therefore subject to the most recent legislation and implementation dates. It is also unclear whether or not other EU approval authorities would have the capacity to validate all the vehicles previously validated by the VCA. If this were indeed the case, this would result in UK built and approved vehicles being unable to be sold across the EU.
Let us be clear as to what happens. Once the UK leaves the EU, the old VCA certifications won’t be valid unless the EU kindly agrees to let them remain in force on some sort of interim basis. Given that no one in Parliament even comprehends the problem, that Brexit negotiators from David Davis on down are allergic to detail and overwhelmed, and that even the domestic lobbying group is bizarrely underplaying the seriousness and urgency of the problem, how likely is that to happen? So that in turn means UK auto and parts makers will not be able to export goods made in the UK to the EU until they obtained new approvals, which normally takes six to eighteen months.
And this means production stops. From North (emphasis ours):
The point Mike Hawes (Chief Executive, Society for Motor Manufacturers and Traders) then made, after Keating had delivered his unrecognised bombshell, was that manufacturers could not apply for type approval while actually manufacturing so they would have to cease production while they re-applied.
As bad as this scenario would be, consider more broadly the impact of shutdown or damage-prevention shifting of EU production and hence jobs out of the UK. It means reduced employment in communities where the auto facility is probably one of the biggest local employers. Given that automobile industry jobs are normally high-wage and relatively stable, the knock-on effects in the area would be significant.
More Brexit Woes
And let’s consider other factors that make this situation worse.
The EU is in the midst of revamping its motor vehicles regulation. While there is draft legislation published, and the rules are expected to be final before Brexit, this does not help the UK’s situation, to put it mildly.
Approvals for other industries are important for the auto industry. From the Society of Motor Manufacturers and Traders:
To take the example of the transposition of the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation into UK law, this will require UK government to decide how the UK will engage with, or domesticate, the work of the European Chemicals Agency (ECHA)[4], a hugely complex and technical regulatory regime. At present, it is presumed that this decision will be taken through the secondary legislation process of the EU (Withdrawal Bill), however, any amendment to the current functioning of chemicals legislation will have significant and fundamental impacts on the operations of automotive supply chains which have REACH embedded in their processes. Additionally, it is important to note that, post-withdrawal, UK companies exporting to the EU must still remain compliant with REACH regardless of the legislation in place in the UK.
North points out in passing that REACH does not recognize third country approvals.
Precedents suggest that the UK automakers will need to get approvals from EU bodies. Again from North, who views the EU-Korea trade agreement as a likely model:
Sure enough, when you read the small-print of that agreement (Annex 2-C), Korean motor manufacturers are still required to submit their products for type approval to an approval authority in an EU Member State, before they can be sold. Additionally, the Koreans have to maintain absolute conformity with EU/UN regulations, including the adoption of new regulations as they are come into force.
North rejected the idea that the UK and EU would agree to recognize each other’s approvals:
There is not the remotest possibility that the EU will accept mutual recognition of type approvals. The best one can hope for is a temporary agreement to tide us over any transitional period. Deal or no deal, in the longer term, UK type approvals will no longer be valid in EU Member States.
UK immigration restrictions will also damage its automobile industry. From the Society of Motor Manufacturers and Traders’ written testimony:
UK automotive manufacturing has a significant skills gap with a particularly acute demand for engineering skills, a 2015 Automotive Council report identified that the sector had up to 5,000 current vacancies which were causing significant impact on business operations[7]. This skills gap is projected to increase due to the ageing workforce and the lack of a sufficient talent pipeline into the industry.
EU skills and talent are utilised in all aspects of automotive business in the UK as companies seek the best available talent to fill a role – UK automotive employs non-UK EU workers in senior executive/leadership, finance, customer service, HR, engineers, technicians, IT and shop floor workers…
Many automotive companies have multiple plants throughout the EU and employees are often moved between plants to meet specific short-term engineering, manufacturing or management needs. Additionally, many companies choose to move employees around to aid their professional development, improving the quality and competiveness of the business…
The automotive industry has experience of employing or transferring non-EU nationals (through the Tier-2 route). This is complex, burdensome and costly, making EU staff access even more attractive. Industry would not want to see this approach replicated for any EU migration system.
The EU provides R&D funding for the auto industry, although some programs are open to non-EU members. Again from the Society of Motor Manufacturers and Traders:
R&D public funding plays an important role in de-risking early research, while the application requirements of the Horizon 2020 programme also plays a role in promoting collaboration across the EU, giving the UK automotive industry the ability to share and learn from the continental partners.
Automakers are diehard “just in time” manufacturers. So supply chain uncertainty is particularly unattractive to them. They won’t hold buffer stocks to deal with production vagaries if they have any other alternative.
The automobile industry is one of the UK’s most important export sectors. If the officialdom isn’t particularly willing to hear that Brexit will do it great damage unless it’s made a significant priority in the negotiations, and worse, industry incumbents lack the guts to make that clear and suggest realistic approaches, what is going to happen to other areas of commerce the individually are lower profile but together add up to meaningful employment and output?
The more you delve into details on Brexit, the worse things look for the UK.
75 comments
Comments are closed.
Wow. That is serious. The problem not mentioned of course is that many EU manufacturers (not just French, German and Italian companies, also makers like Hyundai who have major East European plans) will see this as a perfect solution to overcapacity problems in the industry. They can just shut down their competitors who are based in the UK by whispering in some politicians ear that all it takes is a blocking vote on any attempt to get around these restrictions.
I wonder though if Ford and Peugeot, which have major plants both in the UK and in other EU countries will be able to get around this through fancy paperwork, certifying their cars via their French or Spanish subsidiaries? Just a thought.
When Ireland joined the EU it led to the immediate shut down of what passed for an Irish car industry. There were a number of what were called at the time ‘screwdriver’ plants run by Ford and GM. They basically imported cars in kit form and assembled them in Ireland to avoid import duties. I can see this as the future of the UK car industry – simple final assembly plants for the domestic market.
One thing North mentions, (I’m not sure whether in commnets or the post itself) is that a few manufacturers with EU registered offices are already moving/registering the types there, which means they might be impacted less.
He has a post on aviation today, which is in not a dissimilar shape – different, at a first glance better, but when you look deeper, not so much.
What fascinates me is that this analysis is not done by the govt (which is incompetent), or even the industry bodies (which are either incompetent, or for some reason too afraid to say it up front) , but by bloggers. Say the point Yves boldens – the sentence behind that is (bold mine) ” If this were indeed the case, this would result in UK built and approved vehicles being unable to be sold across the EU.“.
This should be at the top of the document, and all goes from that. It’s a life-and-death issue for the industry, and they burry it at the end of a long pragraph in the middle of the document?
As I’ve posted below, I find the sang froid of so many industry representatives to be very puzzling. I really don’t know whats going on internally in these companies. Is it a deliberate policy not to panic employees and suppliers while they make alternative arrangements? Is it that they are collectively in denial themselves? Do they genuinely believe the issues can be overcome? Or has the message just not seeped upwards to the highest levels that they are really screwed?
Thank you, PK.
My former UK employers, three UK banks and two trade associations, think Corbyn is a bigger threat, so are keeping their powder dry. They also think the situation is lost and see no way of bringing the Tories to their senses.
The problem is that this EU version of the Permit Raj is precisely what Brexiters bang on about as encapsulating everything that is wrong with the EU and why we’re better off out of it (with some justification — it’s a nice little earner for the largely German certification bodies who, even if they don’t do the actual approvals nevertheless have an equally lucrative side-line in standards definition consultancy) and Remainers just shrug and accept as one of the things that the EU does and that it all just goes with the rest of the EU membership deal.
And North does indeed have all the answers. But no one is interested in them as they are political suicide.
So the Wild Ride that is Brexit continues with both sides locked in a mind-set not unlike the Japanese had in 1945.The Japanese did not think they would ever completely lose their war. Some sort of mutually acceptable truce would be agreed because the consequences of not doing so were too dire for both sides — or so they assumed. They were wrong to do so.
On the Permit Raj – well, it is a lot of regulation – but, conversely, w/o Single Market all 27 members would have their own regulation, often similar but slightly different – which, for exporters, would be a much larger nightmare (both French and Germans had zillions of regulation which were, in essence, aimed to protect their markets, so often were different in some minuscule but important way) – the infamous NTB.
Yes, I agree — you can’t have a free-for-all. You’ve got to have some product standards.
The problem I’ve increasingly had with the EU is in allowing themselves to slip into having the standardisation become a system to be gamed by vested corporate interests. A form of crony capitalism but rather than a politicians in a national government being rewarded with favours from pet business interests, it’s the other way round — the businesses influence the EU bureaucracy to make standardisation policies which favour them and their products. Or, conversely, cut competing products out of the market.
There’s very little science involved in a lot of these standards. The ErP directive is a particularly overly-simplistic bit of green virtue signalling which increases costs to consumers for little, if any, energy saving overall. And while some standards wars turn into Godzilla-vs.-Mothra battles between one big business interest and another (such as the ErP for spare parts which threatens so much consumer blowback and hazardous end-user avoidance to appliance manufacturers even they see it as a step too far) these dry-as-dust sounding standards debates have potentially huge cost implications for EU citizens who have to actually buy stuff.
But people who have to live in the EU get little, if any, say over any of it. Did you notice in the link’ed to article above who is doing the lobbying? “via Trade Associations” — it’s those sorts of actors who get an audience with the Commission. It’s all a stich-up between the EU, the standards bodies and the consultant-lobbyists. Eventually the whole democratic deficit of it all can’t just be hand-waved away on the basis that it’s all part and parcel of how the EU works and you just have to take the good with the bad, ends-justify-the-means and so on.
And so much of the CE mark standardisation is just needless duplication of the already comprehensive and authoritative CIML standards anyway (warning, that’s a big download, but it does show how comprehensive CIML working parties and standards are — and how it is a well governed international organisation of highly regarded standing). So why do we have to have EU-specific overlapping and duplicated certifications? There’s some innocent explanations for that, but there’s also a lot of not so innocent ones…
I don’t disagree that a some (possibly a lot) of EU standards don’t make much more sense than to protect jobs (both at the EU standard bodies and EU manufacturers). In some case, it’s just plain stupid. Say because the tightening of the standards had great results on car polution/mpg performance, doesnt’ mean you can keep tightening the standards just so – at some stage, you will run into laws of nature, and they, not EU will win (there are plays that even EU or US can’t win :D)
And, I entierly agree with you that this part of EU deserves the “democratic deficit” monikers. TBH, this is not EU only, but a very common problem with captured regulators.
I have to disagree with you on this.
Of course there are lots of stupid things about EU regulation and certification, but the same can be said of every single national regulatory and certification system ever devised. Industry has been gaming standards since at least the days of medieval German beer laws and bakers dozens. I find it hard to see what real world alternative there is to the EU structures that would reasonably be less bureaucratic and transparent and enforceable (the latter being the huge issue with informal cross boundary agreements). In the area I’m most familiar with – building construction – EU regulation has greatly simplified and improved standards for anything bigger than a garden shed.
While its not my expert area, I’m a fan of the ErP Directive (and its close cousin, the EPB Directive 2006, which applies to buildings). While I’ve no doubt its regularly gamed by manufacturers, transparent energy use labelling has transformed the consumer experience of buying everything from toasters to houses. I know many people who never gave a thought to energy efficiency before who now use a ‘A’ energy cert as a minimum quality when buying products and its pretty obvious that those companies with the best performance now put it centrally in their marketing. While its hard to quantify these things, I’d be very surprised if it hasn’t made a real difference to consumer and manufacturers behaviour.
The problem is lack of accountability and the inability to influence bad legislation.
From my example of the lunacy of having to junk a 5 year old boiler because it can’t be fitted with a new. “A” rated pump, to people like me in my comfy-cosy metropolitan enclave, the £1,500 cost differential is just something I would absorb and grumble about.
To some, though, it’s a winter without heat or hot water or being driven to a pay day lender. What would their response be to being told it was “all ‘cos of EU rules”?
It would likely be you-know-what the EU — and another Brexit-eer is born. In those circumstances, you could not really blame them.
That’s the problem with all these worth (and perhaps not so worthy) EU rules — these policies have real-world impact to real people. But we’re all supposed to — what? — take it on the chin because it’s the EU and the EU is all so marvellous, right?
It’s that kind of shrugging of the shoulders by one group that can stump up the costs of the EU’s do-gooding that led to the other group voting Brexit. That dynamic has not changed one jot.
I understand that and I agree that many regulations are little more than make-work schemes for well connected industries.
I did, some years ago find myself on a scientific advisory committee (a national one, not an EU one) setting standards on a particularly contentious and controversial subject. The committee initially tried to reach out for comments, but found responses very disproportionate between a very well financed and organised industry, and a disorganised and poorly informed set of civic society groups. The ‘professional’ civic society groups said they simply didn’t have the resources to give worthwhile submissions.
We decided collectively that the best way to keep things independent was to exclude all external submissions to prevent input being distorted by industry lobbying and focus purely on the science. The result was the committee was frequently lambasted in the more radical press for being ‘secretive’ and ‘an industry captured body’ (as someone involved in it, I can say this was nowhere near the truth, although it was difficult to ensure that the consultants we used weren’t keeping half an eye on future industry contracts).
I can’t claim to be an expert on the inner workings of Brussels, but from what I’ve heard most complaints from insiders are about MEP’s not being bothered with doing their oversight roles as representatives of the public.
‘There’s very little science involved in a lot of these standards.‘
If science and public health were the goal, compliance with objective standards could be certified by independent labs.
But then there would be no employment for paper-shuffling bureaucrats, and all would be lost! ;-)
Maybe Britain can do a deal with the USA to exempt 1950s replicas and ship us a fresh batch of Jag MK120s, MG TCs and Austin Healey sprites made from the original plans. It’s our last chance to have a bit of fun racing about in sub-one-tonne go-karts before human-piloted vehicles are banned from the motorways and byways.
You would be astonished at the difference in reliability between your 1960’s reruns and modern cars.
I had a 1964 VW Beatle, which required maintenance 1 weekend out of 2. The only British cars I ever owned were for fun, not everyday use.
There’s a reason why ol’ Joe Lucas was called the Prince of Darkness:
https://jalopnik.com/399791/joe-lucas-prince-of-darkness-british-electrical-system-jokes
I once owned an Austin Healey 100 (BN1) in which Mr Lucas was much in evidence!
As I recall, the only thing the above sequence didn’t affect was the overdrive switch – thankfully.
About half of the plots of all the “Hammer Horrors” (and a good deal of the 1970’s pr0n too) wouldn’t have been the least plausible without the widespread public experience with British Motor Vehicles.
Sure, I can see the opportunity for abuse presented by 27 separate standard bodies. It’s the same thing retailers and manufacturers do to support their bogus “price match
guarantees”.
The real issue is the current setup where uniform standards comes with an entire supra-national government.
Is there nothing between these two poles? This is not a binary world. We have options. Who’s got the balls to put some of those options on the table.
The Japanese kept underestimating just how much the United States was willing to pay as well as the Americans ability to give suffering. Rather like the British with the American Colonies. Even during the fighting the Americans were consistently underestimated both in ability and determination.
If the nuclear bombs were not available, the combined British and American forces would have in a few months. There was also a contingency plan of a complete naval blockade combined with a campaign to destroy all rail, sea, and water transportation. It would have been impossible to move whatever food was grown to the cities. Deaths would have been higher than the full scale invasion.
Apropos aviation…:
http://www.adriatehnika.com/en/homepage/company/news?adria-airways-tehnika-is-easyjets-mro-provider-for-registration-change-to-austrian-registry
RoHS and REACh are enshrined in UK law, the intention is to keep them there at the moment. The EU requires that any non EU state uses an EU based contact to manage their compliance, so UK companies will have to pay someone in the EU to do this – lots of money for each company.
The UK based auto makers will export unfinished goods to the EU for final ‘assembly’ and approval (it could still count as a movement within a company rather than a cross border transaction but the UK hasn’t sorted this out either), so they can get around the import problem but as a long term solution, expect to see manufacturing migrate if a real solution is not found because of the hold up at the ports.
The big problem is the absence of import export paperwork, which is going to take some years to sort out. No computer system is equipped, so all UK shipments will be held up – globally, as the rest of the world won’t be able to ship to the UK using EU paperwork as it does now.
UK based companies can still comply with REACh and register with Stockholm, so they can meet international standards – the legislation requires that chemical compliance is transparent through the supply chain, regardless of where that company is based or carries out its chemical work.
Will shipments into the UK be completely unfettered?
Is the UK a net importer or exporter?
Does the EU hold all the cards or is this just a Remainer strategy to make it appear so.
The United States is ready, willing and able to make bilateral trade deals with the UK if the EU wants to sulk.
To bad Tiphook folded, there’s going to be a nice business running containers between the UK and the east coast of the US. Personally I’m sick of crappy Chinese made Dr.Martins.
Even more serious are the plans of BMW and Daimler to leave their production and R&D facilities on the UK, and move back to Germany.
Esp. BMW.
This is something that has been puzzling me, I’d be curious to hear other peoples thoughts on this. After the initial ‘Oh God we are all so *family blogged*’ reaction from business after the Brexit vote, there seems an almost unanimous desire, from financial institutions to car makers to dairy producers to airlines to downplay the impacts. It seems everyone is mildly concerned, but nobody is close to panicking yet. I’ve heard it expressed in everything from casual conversations to public pronouncements from major players that ‘some kind of fudge will be agreed at the last minute’, or ‘it will be difficult, but we’ll deal with it’ (Michael O’Leary of Ryanair being a rare exception). The only people I know who are ‘panicking’ are mid level tech people I know who work in vulnerable industries who are tearing their hair out at the implications (and worried about their jobs).
I’ve been trying to get my head around why this is. It is a case that at a senior level most CEO’s really do believe that a deal will be done so any damage will be short term and manageable? Is it just a cover story while they quickly arrange their Plan B exits? Do they know something we don’t? I would love to know.
I know that some FS instututons are counting on hard brexit, but not chaotic brexit (although chaos would impact mostly their staff and travel). Not sure about others, but I suspect that few – regarless od size – actually did the hard yards and recognise what it all means. It’s fiendishly difficult to have even a reasonable idea of what’s going on – but that should make one actually more wary of how hard it will be to disentangle and resolved. 2 years? Keep on dreaming..
The totally incomprehensible thing to me is that ALL of this analysis could (and, for Brexit to have any chance of being success should) have been done before triggering A50 (and EU could huff and puff, and that would be about all it could do about the UK invoking A50 at its own schedule – or the UK could tell them they would invoke A50, but only if EU agreed upfront that it would not be two years but as long as it takes – to which there are no legal impediments, as A50 does not say when the unanimous agreement has to be made). Even some work, in industries where there’s a choice of EU umbrella and the country itself, one could move competencies etc. THAT woudl be taking control. Triggering A50 w/o that legwork was jumping on a rocket hoping it has a parachute attached, and that one will land somewhere nice.
Me too and I have no answer – it’s bizarre that the entire administrative edifice appears to be running on a belief in ‘it’ll be OK on the night’ coupled to a high level of arrogance. Either that or there is some deep and hidden Plan B, C, D work going on – in Govt as well as industry – that is being kept well covered. And that would be unusual given how leaky everything is if there is political capital to be made.
On and off, I’ve been reading Richard North’s EU Referendum blog for years, and whatever else he does he does detail, thus his regular readers are alarmed (increasingly so) by the apparent lack of depth and grasp of detail shown by Ministers, MPs and seemingly now by industry leaders.
Is the whole approach based on a mixture of:
a) Ministers (and Mrs May especially) firmly believing they can cherry-pick the bits of EU agreements they want and leave the rest because… trade;
b) after 40-odd years the administrative wheels underneath the UK Govt STILL have no idea of how the EU works (and/or don’t care) and thus can’t brief Ministers and MPs correctly, and in great detail; and/or
c) in general, after those years of the EU deciding policy and laws we have lost the ability to do detail (although it’s difficult to see how this can apply to very senior managers but (as stated above) maybe middle managers do it all); which in turn leads to
d) a lack of depth, quality, commitment, and above all administrative ability (however we want to describe it) in our Members of Parliament and Civil Service?
Seems to me the result is, as per Greece, the UK negotiators and their EU counterparts are yet again talking past each other. And likely with terrible consequences for all in the UK.
Most of the detailed planning and consultation should have been completed before notifying Article 50, but hey, we don’t do detail. For my money (and I voted leave) let’s take the easier option: stay in the EEA, go for a Norway-style deal and re-apply to Efta (if they will have us after such shenanigans) and take 5-10 years to sort out our positioning re the rest of the world and trade. Not simple but it is somewhat easier. And perhaps not politically viable for Mrs May but… methinks we need to be on a war-footing about this.
I think there are a couple of possible answers, not mutually exclusive. One is a result of the tactics of the Remain campaign, which, rather than trying to argue positively for the EU, and trying to show that it had benefited ordinary people, opted for an elitist campaign of fear – OMG Four Horsemen of the Apocalypse – which became more strident, even hysterical as the referendum approached. The apocalypse, (whilst it might be on the way), has yet to arrive. But there is a limit to the amount of fear that people can absorb without becoming punch-drunk, and I think that all these warnings now have incrementally less effect, tending eventually to zero. It’s like being told you are going to die of cancer, then heart failure, then kidney failure, then liver failure. By the time somebody tells you you have Alzheimer’s as well, you are beyond caring.
The other is simply that if a week is a long time in politics (H Wilson, prop) then 2019 is an eternity, and most political systems, especially under stress, are incapable of thinking that far ahead. My experience of political crises is that they involve so much day to day detail , usually glossed over when the books are written, that thinking about the future just gets squeezed out, and you wind up, not originally where you wanted be, but in a wholly different place that a series of short-term panic decisions have brought you to.
Thank you, David.
A friend, also a journalist (for a German owned publication), suggested as much yesterday over lunch.
He added that one of Osborne’s allies, colleagues (at Tory HQ, Treasury and Black Rock) and donors reckons the Tories can win the next election as millenials will get over Corbyn when the official campaign begins.
Thank you for informed comments as usual. My worry concerns your last sentence – indeed, Corbyn’s millenials are going to want to see something different from what Labour have done in practice in the Commons etc…..it was one thing to “give a nuanced line” during the last general election, in order to “leave the door open” regarding *something* as a “reversal” (whether it be a vote on the final BREXIT agreement or whatever) but Corbyn can’t keep playing that card and keep a bunch of “safe” Labour seats safe (witness Mansfield). His party is just as divided as the Tories and people don’t realise how much of a knife-edge Labour are on too. It remains to be seen how he plays things, and what the public does in the event of a catastrophic BREXIT in terms of blaming the Tories….or not.
Brexit cuts across left/right policies, and there’s an argument being made in quite a bit of the world, that the left/right divide is passe..
TBH, Labour on Brexit shows it’s not much better than Tories not only on this, but on understanding the EU.
For example, a lot of the industrial politcs that Labour claims EU would stop them from implementing would actually be fully implementable under EU (hey, France and Germany to name two have their own industrial policies, and want to keep them, thank you very much, in fact, its not an uncommon thing in EU).
Indeed – though I have a question (that I’m pretty sure you or the colonel know the answer to, but I don’t) – is the media line that privatised/contracted out services can’t be “brought back into govt control – renationalised” under EU rules true? If so, it’s the kind of argument I can imagine Labour making in terms of an “EU-free nirvana” but (of course) I have a healthy degree of scepticism over whether this line reported in the media represents a real EU policy or not so someone like me (who is “reasonably up” on broad issues is genuinely unsure of what the reality is and needs guidance). Thanks. T
Its a very good question, and one I’m not an expert on, I think the answer is ‘it depends on who you talk to’.
I have to confess that most mornings when I leave for my office I quietly curse under my breath a particular politician responsible for the Directive which led to the privatisation and contracting out of waste collection in my city. I live in an area with lots of transient short term residents, leading inevitably to bags being left out for non-existent waste collection companies, which then get torn apart littering the street with rubbish. It didn’t seem to occur to whoever thought up the bright idea of competitive waste collection that it is generally a local authority service for a very good reason.
Competition rules certainly make it very difficult for public bodies to manage long term many services. I think interpretations (and sometimes deliberate or accidental misintepretations of the various public procurement directives have been very damaging for public services. But from what I’m aware of, most authorities have managed to avoid them if they really wanted to. The only element really enforced relates to open EU wide tendering.
I suspect that the reason this is such a significant issue for the British left is that the lack of a written constitution means that Parliament can do pretty much what it wants, hence EU obstacles seem bigger to a radical government. In most countries, domestic constitutional limitations would be a much more significant obstacle to a radical left wing government. In Ireland, for example, guaranteed protections to private property makes nationalisation almost impossible if the owner isn’t happy about it.
Thanks – although you express uncertainty (“it depends on who you talk to”) that actually reassures me in a weird way – that if you are unsure then I haven’t been a dunce and completely missed/misunderstood something “obvious” regarding EU policy!
as PK says, it depends on who you ask. I’m not aware (which doesn’t mean it doestn’t exist, I didn’t look too deep into this) of say UK govt being prohibited from setting up a public entity that would – for example – buy out British Gas, and then operate it.
That all said, I’m wary of the “let’s renationalise everything” in the same way as “let’s privatise everything”. I’ve seen debacles and sucesses with both, so it’s really much more about long-term thinking that a knee-jerk reflex. Say some of the UK rail is ok, some is horrible. People who had experience of national British Rail tell me that it was horrible (maybe not as horrible as Southern, but not too far away I’m told).
Would nationalisation on its own help? I doubt it. The problem is that London has grown way too large for its infrastructure, which was neglected BOTH privately and publicly. Thames Water was privatised “only” 30 years ago, but the infrastructur it runs on is 150 years old in places. Yet, the UK pols mostly talk about the infra investment, but apart from some very visible high profile (and often dumb, in the end, like HS2) investment nothing happens.
Thank you. Yes I’d agree that “nationalisation per se” is not *the answer*. But one thing that does stick in my mind regarding it is actually a real example concerning British Rail. BR invented the tilting train – intended to allow high speed rail on a network which wasn’t designed with “lots of straight sections” (like the French TGV). The technology worked – there were just minor kinks to be worked out, and this was back in the 1970s. The first demonstration did illustrate some of these minor kinks (which the engineers already knew how to fix – they were annoyed that the political timetable made them roll it out a bit too early). Thatcher used it is as an example of inefficiency and the technology was abandoned, sold to the Italians, who said “thank you very much”, then promptly sold it back to us, having implemented the changes to address these minor kinks, and thus Virgin, to great fanfare, rolled out the technology, making profits that should have been the public sector’s in the first place.
Not to mention the Intercity 125 train still is in major use, having been implemented in the 1970s, and showing great reliability to this day (unlike many more recent “better privately designed” trains). People on the lines to Bristol and the SW see this on a regular basis. OK just an anecdote, but BR engineering was years ahead of its time and it was all lost to the private sector (of other countries). A sad sorry tale.
And to provide an example of “customer service” where the private sector may have helped sooner – Birmingham New Street Station is a major terminus for several lines. In fact it’s the major terminus in the midlands. The private sector identified the fact that shorter, but more frequent services, would line up with consumer demand better.
The problem is that the station was never able to cope with that – it was designed under a unified system to deal with long (9-14 carriage) inter-city trains that arrived hourly. Much more frequent services of 5 carriages simply overloaded it – despite being a big station, there were bottlenecks in the approaches. Thus it became known as a nightmare station to change trains at during all my times using it (1998-2009). Now it is finally being fundamentally redesigned, with big changes to the approaches, in addition to changes in the station itself. One has to ask oneself if a public-private integrated plan 20+ years ago would have got this sorted a lot sooner. (Just so I don’t sound like I am arguing that a nationalised BR would necessarily have been the solution to everything, hehe.)
Those tilting trains were abandoned as not passenger friendly.
The caused motion sickness. (aka Made people Sea Sick).
The trains worked, but we could not fix the people.
And “teething problem” (motion sickness issue) was addressed early on by BR and research has confirmed what the engineers knew back then:
The APT-P trains were quietly reintroduced into service in mid-1984 and ran regularly for a year, the teething problems having been corrected. However, the political and managerial will to continue the project, by building the projected APT-S production vehicles in numbers, had evaporated under an in-house engineering management who felt slighted and by-passed in a project they did not develop. Despite being an eventual success, the project was scrapped by British Rail in 1985, more for political reasons than technical.
I’d add to this that EU policies and directives can be directly contradictory.
For example, there is a clear clash between the Competition Directive (which applies to waste collection) and a variety of waste directives which seek a stronger policy on waste minimisation and recycling. Policy in one direction (pushed by the Environment Directorate) pushes for more actively interventionist strategy on waste, while at the other end, local governments are forced to put waste collection and the management of waste facilities into private hands, with decisions made on the basis of a least cost offer. This has created a very wasteful and contradictory series of policies on the ground – in the case of the litter on my street, literally so.
I’ve generally found that politicians and administrators pick the option that is easiest/most profitable for them, picking and choosing the rules that suit them and then say ‘we’ve no choice, its an EU Directive….’.
Carolyn wrote: Is it that ‘…after 40-odd years the administrative wheels underneath the UK Govt STILL have no idea of how the EU works (and/or don’t care) and thus can’t brief Ministers and MPs correctly
No. Sir Ivan Rogers who was UK ambassador to Brussels — and whose testimony to members of parliament Yves featured in a NC post earlier this week — detailed to May’s government how complicated Brexit would be and warned that Article 50 shouldn’t be triggered until the UK had as many of its ducks in a row as possible. The Maybot forced him to resign.
Richard North, the writer of the EUReferendum blog post on which this NC post focuses, also has worked in and around Brussels in various capacities. The UK Civil Service isn’t what it was, but there are plenty of people there who understand how the EU works.
The triggering of Article 50 and the consequent tragedy/farce result from the utter incompetence and the commensurate arrogance and selfish careerism of the top layers of the UK political class.
This is the same tendency of late-state neoliberal kleptocracy to become a kakistocracy that we see in the USA coupled with the traditional tendencies of the awful British class system to promote malign buffoons like Bojo and the Bullingdon set who all knew each other at Oxbridge — upper class twits, if you will — to positions of power.
‘a)’ – I think is the key, the UK decision makers truly believe that the UK is indispensable to the EU and therefore the EU will concede to their demands,
Not sure about ‘b)’ – If they had the similar one week EU-introduction course that I had ‘back in the day’ that my employer booked from the UK Foreign Office they are very well informed about the general themes and know how to get more informed specifics.
There is an organisational dynamics at work, I think: I have noticed that the people being the most vociferous about how other peoples affairs should be managed are often also the most incompetent in the handling of their own.
In my current place of work, the most incompetent division are ceaselessly lobbying management for more budget, decision-making powers and influence to set policies – despite delivering mostly serial failures, unworkable plans and dysfunctional processes based on tools that fail even during the training session. Obviously, this is what management must want since they keep doubling down on the same “advice” from the same people who made the last messes!
What can one do about this? One can manage ones own business as properly as possible within the rules and document ones view for the eventual inquest. There is nothing gained by getting all upset and having a heart attack or something over the unrelenting stupidity, so, one worries only about things one can actually control, and only concerns oneself about “risks” that has actually happened.
‘c)’ and ‘d)’ I totally agree with (In my opinion ‘d)’ is an almost universal leadership problem)!
Methinks that the fcUK dodged a bullet as Reeves, a former Bank of England and IMF official, was tipped for a cabinet position if Red Ted Miliband won in 2015. According to a Bank and former IMF official, her political grandstanding, verging on the chippiness, was annoying.
Reeves’ sister is an MP. Her brother in law was a Labour party official. Labour does like its dynasties.
Speaking of dynasties and CEOs, a friend of a friend works at the main residence of the chairwoman of UK PLC (Inc. outside these islands). The chairwoman and her family are not best pleased with Brexit and how it’s being “managed”. They don’t talk to the servants about it, but it’s not difficult for the servants to pick up what’s said.
I’m not sure that Ed Milliband could possibly be classed as ‘red’, and I seriously doubt that Reeves would reach BoJo-vian heights of political grandstanding and chippiness.
A hung parliament in 2015 – or Lab/SNP coalition – would not have given us a EU referendum. That would have been a bullet dodged.
PK, Jet2 has already moved its HQ to Europe.
Once again, we see the consequences of Britain making important decisions at 3am after a dozen shots of tequila. Sounded great then. Was unclear in the morning. And with each passing day, the details of the debauchery and stupidity of that fateful night come to haunt them.
Britain may one day be better off outside of Europe, but not for a long time. But Brits have always prided themselves on suffering with less or inferior things. Dunkirk Spirit and all that. I suppose their children will proudly tell their grandchildren how they survived the UK Depression of 2020-2060 while refusing any help from the EU.
I should have said Helsinki not Stockholm, apologies
Thank you vlade, you consistently provide excellent foresight and insight, as do the other europe based commenters that unsurprisingly figure prominently with in depth responses to this and other brexit posts. Thanks also to yves/lambert/nc support crew, this info is not available anywhere else that I am aware of.
This could be a silly question from an American outsider, but do the Germans export more to the UK in total than all UK exports? If so, what might happen to that trade? Doesn’t the EU risk a trade war they won’t want in this category?
From this page I get the impression that German exports to the UK are about 2.5 billion Euros. UK exports to the EU are about 6 billion, to the rest of the world are about 8 billion.
That’s just goods. I guess the services figures will be even more skewed to the UK.
Weird, so let me get this straight. The European Union is punishing the UK for opting out of the club. The European Union has all the power, no one in the UK can even muster the intellectual wherewithal to respond in any way and optimism is a sign of mental illness.
The hydra-like EU bureaucracy and resulting loss of sovereignty is why people wanted to leave the EU. Now we can’t leave the EU because of the hydra-like bureaucracy? Catch-22 wot mate?
Sack up, England you used to have balls. Stop listening to whinging middlebrow technocrats who spent a half of every day obsessing over “what must Europe think of us?”, and the other half wondering why the poor are so acrimonious.
It may be time to go sort a wayward Europe out again.
The EU is not punishing the UK thus far. It is much more a matter of the UK self-harming. The Conservative Party in particular have much to answer for. They held a referendum to sort out an internal Party problem, lacked the necessary discipline they needed to get the result they required (a vote to remain in the EU) and have been struggling ever since. Their internal discipline is still non-existent so that the people who are supposed to be working for Mrs May are in fact conspiring against her. As a result she can do nothing while the deadline for decisions comes ever nearer. The worry is the minute she makes a significant decision a segment of her party will rebel against her and bring her down.
Recently May proposed to pass a law making it illegal for her government to postpone Brexit even if it wanted to. This was compared to scenes in old movies where the heroine is tied to the railway tracks as the train approaches, but in this instance the heroine is tightening her bonds to prevent her escape. British politics has become a farce. But the stakes are serious.
Influential Europeans are close to despair. What happened to the sensible, pragmatic English they were used to dealing with? The English seem to have lost their minds.
You are breaking no new ground. The people want out and out you must go. Casting about blame is wasted energy in a culture where laying blame has become a substitute for action. This is the upside down world where politicians decry any demands put upon them by the people and respond with, …iit’s inevitable, Can’t you see it’s inevitable.”
Those influential Europeans you speak of are the Continental whinging middlebrow technocrats, and at this point everyone outside of that bubble is heartily sick of their opinion on anything.
This is class warfare by the class of people whose lifestyles come at the expense of the average working-class individual. It’s neo-feudalism, the gentry versus the serfs. Softly obscured by fuzzy language and enforced by deceptive laws, carefully crafted by those who benefit from them. Those laws can be undone or the manor houses can burn.
By all means argue the contrary ad nauseum, nobody believes you anymore. The UK has become a parody of what it pretends to be.
‘It may be time to go sort a wayward Europe out again.’
Advocating war?
It’s already war. It’s lawfare, aimed at destroying the right of citizens to self-govern.
Loblolly wrote: It’s already war.
You have no effing idea.
Yes, the financial realm is where states increasingly conduct war and conquest these days. Yes, the EU is in some ways a horror. But disentangling from it required the same kind of concentrated effort that dismantling a bomb required — and put in over years.
Escalation to actual semi-covert warfare between states — between the EU and the UK — could include the release of both crop blights and pathogens against the enemy’s civilian population, funding and arming of terrorist factions in the enemy’s territories, continual industrial sabotage, including the setting off of explosives in population centers, etcetera.
All that is actually what goes on now in 21st century interstate conflict — though ignorant civilians like you have no idea — and where this might escalate to.
You watch too much scifi. Thinking about imaginary biowar while dismissing the real economic war against the people. Calling us ignorant civillians is really just the icing on the cake. You should be ashamed of yourself.
You really have the plot utterly wrong.
The UK attributed the bad economic consequences of Thatcherism to the EU. So pols could blame Brussels for damage they had created.
As for gaining national control, that is also delusional. If the UK wants to trade with the rest of the world, it has to comply with their regulations.
Put it another way: I challenge you to cite particular EU rules that have done harrm, and tell me why/how the UK would do better in that category.
Since North was mentioned earlier, I very respectfully offer a couple of links, and I only mean to highlight some of the complexities
involved, and since booker isnt in the cladding business either, he gets some things wrong too, the specifiers would be the specialist cladding subcontractors, since this type of product design is well beyond the training and expertise of architects who would specify appearance and performance only. And what nobody seems to mention is design liability, the contractor/subcontractor would have full design liability for his detailed design proposals (the selection of specific insulation materials, cladding systems, fixings, proposed fire tests etc is down to the expert who is qualified and insured).
I would note that Design liability is criminal law, not civil, eg specifiying the wrong paint in a commercial kitchen can end up with prosecution and jail in the event of a fire. And for the avoidance of doubt, if any client orders a spec to be downgraded to save costs, then yes the client assumes the design liability instead, and experienced clients would know better.
So when they do try to make changes to inevitably save money,
they must get the written acceptance of that change by the designer. In fact because of the huge design liabilities involved its common for cladding subcontractors to choose the british fire test voluntarily at additional expense, this discussion has gone on decades. Why take any unecessary risks? Or to hire an independent qualified fire engineer to review detailed proposals as equal to another system previously fire tested, to pass on their liability. That includes italian swiss and german subcontractors.
http://www.eureferendum.com/blogview.aspx?blogno=86528
http://www.eureferendum.com/blogview.aspx?blogno=86526
You are willfully trapped in a fundamental misunderstanding of reality because it protects you from facing the truth. A ruling class, that you are a member of, has failed consistently for decades to share the benefits of globalism with average citizens.
Your lot seems to think another pittance thrown towards training and a series of articles about how perhaps there are the slightest of downsides to all this wealth we are creating for ourselves is going to make everything ok.
Well it’s not. You like trivializing our concerns about the loss of our social and economic mobility. Maybe it eases your guilt to belittle our concerns and our intelligence. Meanwhile you parcel up our nation states with treaties that shaft us while you get richer. I see it, we see it. It’s not over our heads because we don’t work in finance or government. Far from it, we see it because it is obvious. It’s obvious to anyone who does not spend their whole existence rationalizing away their complicity in selling out their countrymen, for a dollar, a euro or a pound.
Who’s got the plot wrong? You do. The best part is that you don’t even seem to understand economics, you barely create wealth. All you seem to know how do is collect rents. Instead growing the economy so we can all benefit, you just keep moving it around whenever the locals start wanting more than the global minimum wage.
> The worry is the minute she makes a significant decision a segment of her party will rebel against her and bring her down.
Our impression in Europe is that May days are counted anyway, regardless of the outcome of the process. She is the scapegoat already.
So she will just go forward ignoring the cranks who just want to save their seats. Nothing to loose for her. That’s the plan we thought.
Loblooly wrote: let me get this straight. The European Union is punishing the UK for opting out of the club
Not really, so far. There was the possibility that the EU would try to behave towards the UK as it did to Greece — that is, attempt to crush it as punishingly as possible. That would be a longterm recipe for disaster from the EU’s viewpoint since the UK has plenty of ways to punish the EU back that Greece doesn’t have, once it existentially had nothing to lose and it became an island with 60 million hostile people off the coast of mainland Europe.
Thankfully, there are factions in the EU who recognize those dangers. Michel Barnier, in particular, and the people around him have impressed me as exhibiting a degree of forbearance and competence that I didn’t expect — and that have been sorely lacking on the UK side.
The UK’s strategy has so far seemed to amount at best to the Blazing Saddles gambit: if you don’t give us what we want, we’re going to shoot ourselves with Hard Brexit and then we all — the UK and the EU both — will have a problem.
“Now we can’t leave the EU because of the hydra-like bureaucracy?”
In my opinion, what is happening is quite the opposite as the EU is kicking the UK out as fast and far as possible through an “hard brexit”, but the brexiters still believe that the EU is trying to keep the UK in (because they are sold on the idea as the EU as a fouth german reich or something like it).
This explain the “blazing saddles” strategy of the UK: UK politicians assume that the EU wants them in, and say: if you want us still somewhat in, you have to give us these concessions. But as the EU doesn’t actually want the UK in, this stategy is a nonsense to begin with.
In fact the EU is saying: if YOU want to be still somewhat in, you have to give us these concessions (unacceptable for brexiters).
This is also the problem of the “disorderly exit”: the UK assumes that some bad consequences such as UK airlines losing the right to fly over the EU are a sort of blackmail of the EU against the UK, but in reality the EU thinks: well, your choice, your problem, why should we go out of our way to help you?
So it’s not a blackmail, but in many ways from the point of view of the UK it’s worse than a blackmail.
I think that this misunderstanding (that is caused by the ideology of brexiters) is very dangerous for the UK and also the root cause of the policy “errors” of the UK.
Sticking with the current British performance, this means Send Boris The Clown, to tell everyone his system for not wearing ones knickers on their head!
… and somehow booking the venue in Baluchistan!
… and then complain about EeeeVilll Eurocrats Boycotting Free Speech.
Hoo boy. Go long “stuff people need to grow their own food,” I guess. Kidding, except not. (A return to the commons. Would that be so bad?)
This reminds me of the North Korean defector who’s in the news now because his intestines are riddled with worms (no imported fertilizers so they’re using human waste).
I wonder how Britain’s version of Juche will affect nutrition.
I would imagine that a return to the Commons would be highly desirable & perhaps events will bring the issue to the fore, thereby producing a greater consciousness of the issue which would include the old ghosts of food riots, Diggers, Levellers, civil war & a former rapacious elite.
Brexit being an unraveling that could leave many naked & in desperate need of a fresh garment ?
It sounds like some of the descendants of the Captains of Industry that oversaw the death of the English motorcycle industry in the 1960s are working as officers in the automotive industry. I guess it is a blow for tradition or something.
I’m curious: what are NC readers who live in Britain doing personally to prepare?
Absolutely nothing.
Frankly, the swivel-eyed Little Englander Brexit loons and the everything-and-anything-can-and-should-be-sacrificed-on-the-sacred-alter-of-the-great-EU-God Remoaners are simply two sides of the same coin as far as I’m concerned. A pox on both their houses.
Unusually for me, who isn’t normally to be found occupying the soggy middle ground, what’s needed is a bit of Grand Bargain, third-way centre of British (and EU) politics comprises. But the more the U.K. government demands ridiculous concessions from the EU, the more the EU thinks, rightly, they’re a bunch of clowns. And the more the EU demands Big Money Prizes and lines up its easily pushed around pawn in the Republic of Ireland to bleat about how it doesn’t want a hard border but has no choice but to have a hard border and what are those pesky refuseniks in the U.K. going to do because oh, gosh, it’s all so awful, the more Brexiteers are thinking this is why they voted Brexit in the first place.
So I suspect that, here as with most things, I’m bound to end up perennially disappointed.
If it looks like a worst case scenario we will move to France.
You have a French passport or permanent residency?
As a EU citizen until 2019 I have right of residence. I don’t expect that to be rescinded. Of course it would mean moving before end March 2019.
I expect the UK to regain its sanity after a reasonably short period so would not expect to want to stay outside the UK long term.
I suppose the status of Brits in the EU will depend on the status of euros in the UK?
I doubt it. The EU is a very rule based organisation which is arguing that EU citizens who arrive in the UK before March 2019 have the right to stay permanently. That makes it very difficult for them to change course and argue that it should be different for British EU citizens in the EU 27.
Brexit is a deliberate farce.
Perfidious has agreed with the EU PTB that they get to devalue the “Pound of Stering silver” and join the euro.
By all means, treat Brexit as a serious issue. Just don’t foget to express surprise and relief at what transpires.
Far more serious matters are afoot
Don’t worry, loyal subjects. I will save you all by completely blocking any sort of Brexit, in spite of (or because of) my democracy.
God save the queen, and I will save you from all of this democracy.
Keep Calm and Carry on, your queen has spoken.