Shockwaves ran through industry over the weekend following the chancellor’s alarming interview with the Financial Times. If anyone thought Brexit would be wisely “done” once election posturing was over, what a disappointment. Sajid Javid has shown that political positioning still shapes policy, and that ministers are still under threat from Dominic Cummings, the bully “adviser” of No 10, with his “continuous appraisals” and “delivery dashboard”.
Without nuance or caution, Javid warned: “There will not be alignment, we will not be a rule-taker, we will not be in the single market and we will not be in the customs union.” Yes, “there will be an impact on business”, which had to “adjust” to the new reality: companies had had time to prepare, though “admittedly they didn’t know the exact terms”. No one does, as manufacturers protest at his refusal to disclose which EU rules he rejects. As Cummings said: “We are not interested in level playing fields.” That makes no deal or only a minuscule deal dangerously possible.
Well aware of what no alignment portends, the cabinet minister Michael Gove last week reconvened the emergency XO (Exit Operations) committee to prepare for a “disorderly” Brexit in December. Will he repeat the monstrous waste of £2.1bn allocated for Operation Yellowhammer ferries, motorway closures, stockpiling and freezers for the do-or-die 31 October Brexit? The EU trade commissioner, Phil Hogan, said the December 2020 timeframe was “impossible”, but here is No 10’s reply: “We are not bluffing on no extension.”
The EU always said fisheries came first – nothing would be agreed until fishing inside our 12-mile limit was agreed – the most emotionally fraught of all issues. Fisheries may be an economic tiddler, but national identity and the romance of the sea matters more than money on both sides of the Channel. Who will blink first?
The Department for Exiting the European Union, HMRC and the Cabinet Office couldn’t explain. They hadn’t a clueNigel Baker, Calico Cottage
Javid’s abrasive Brexitry dashed industry hopes that a stonking 80-seat majority would allow the government to devote itself seriously to the practicalities of prosperity, growth and productivity. His words drew this despairing view from one engineering company chief executive: “Self-serving complacency! To bring in divergent regulation is purely doctrinaire and ideological, as it makes no sense on the ground,” said Andrew Varga of Seetru, a manufacturer of industrial valves. “Europe’s CE kitemark is gold standard and all that’s needed, but they spit on it just because it’s European: they want ‘Great British’ standards.”
To keep the treasured CE mark, Varga has taken on the expense of bringing in a German auditor three times a year, a new computer system and having staff check his 30,000 product configurations, his perimeter fences and staff security. In all it is costing £750,000 from his £11.5m turnover, meaning no new staff are being employed. “That is money I should spend on improving productivity and our next innovations. Now they want a separate UK label to be engineered in, with humungous costs if I need UK auditors and inspections as well.”
Will the prime minister going “hell for leather” for a US trade deal compensate? “We trade with the US but a deal makes no difference. It’s hard to sell there as they prefer to buy American. India? A deal will mean letting in cheaper, lower-quality Indian products.” Varga reckons that since the Brexit vote he has lost about 18% of the EU business he had been expecting. “Everything the government says and does suggests people behind desks with no concept of business, no consultation with us.”
Ask quite different industries and you get the same answer. “Frightening and stupid” was Nigel Baker’s response to the Javid interview. His company, Calico Cottage, makes chocolate and exports it to France and Germany. Is he prepared? He’s indignant, as he has failed to get official information on what forms and codes he needs. Some of his products have 15 ingredients with origins around the world, all needing certificates at each crossing. “The Department for Exiting the European Union, HMRC and the Cabinet Office couldn’t explain. They hadn’t a clue, so I’ve just guessed, and I hope no one checks.”
Brexit had already caused a steep rise in sugar prices from the EU, he said, and no deal meant another 25% tariff. “Confectionary has a very tight margin: that’s not sustainable.” He blamed Labour: “If they’d had a half electable leader, business would have voted for them, to stay in the customs union and single market.”
The Food and Drink Federation, echoed by other industries, called Javid’s words the “death knell” for frictionless trade, warning of inevitable price rises. Ian Wright, the FDF’s chief executive, said: “The idea we can prepare is ridiculous. We don’t know the rules. [Javid is] burnishing his credentials to stay chancellor, but it’s a real danger if the UK and EU don’t align their regulations. If it’s … abandoning EU social and labour regulations, the EU will impose stiff tariffs. This sector has tight margins, only 2-3%, making exports not viable.”
Wright points out much of his industry is based in the Midlands and north of England, risking good manufacturing jobs in the very places Boris Johnson has pledged to “level up”. Any divergence in any part of each industry threatens companies and jobs. The Confederation of British Industry is cowed, but businesses are aghast at the recklessness of a chancellor they fear doesn’t know or care what his words will mean for their sectors.
This is a government still in electioneering mode, floating airy ideas for eye-catching headlines with those “bobs for bongs”, the Lords sent to York, or a revolutionary assault on Whitehall mandarins. But these showboating announcements quickly evaporate as frothy impossibles. And in 11 months’ time Brexit will hit the hard place where voters will find it isn’t “done” at all.
• Polly Toynbee is a Guardian columnist