The UK food and drink industry is recovering slowly from 18 months of crisis. Covid closed down lots of producers roots to market as shops shut. Brexit took away export customers. The apparently endless supply of low paid workers who kept everything running has dried up.
This week we signed a post Brexit free trade with Australia. This should be good news for the industry, but sadly it is yet another totally one sided agreement.
Before the trade deal there were tariff and non-tariff barriers on trade between the 2 countries. Britain had quotas and tariffs in place for Australian products, Australia had a very tight regulatory framework for agriculture, food and drink, including incredibly strict phytosanitary regulations. While these are well intentioned they make it incredibly expensive for small businesses to get their products into the Australian market: it would cost us £30,000 per product to meet these rules.
Australia wanted us to relax our tariffs and quotas, we wanted in return a deal that reduced the regulatory burden on British exporters
Australia got what they wanted – tariff free access to UK markets which allows them to export large volumes of cheap agricultural produce to the UK under-cutting British farmers.
We got nothing in return, other than some good headlines to reassure a needy Prime Minister.
This is yet another trade deal in which our Government put the interests of foreign companies selling to the UK ahead of UK businesses. British farmers who are banned from using barren battery cages, sow stalls, hormone feeding, hot branding, and mulesing are being asked to compete on cost with farmers for whom all these practices, and more, are legal.
There is some logic here. Hardly anyone works on a farm these days, so if farmers go out of business the impact on employment isn’t huge. Everyone buys food, however, so securing cheap food from abroad is more important than protecting British businesses. The people who voted for Brexit and Boris are in the majority retired and don’t work. They are happy trashing our own industries as long a they still have cheap food at Tescos, even if it risks the long term future of our economy.
But there is maybe more to this.
Before the Brexit vote pretty much every economist warned that Brexit would be bad for the economy. Their dire forecasts were laughed at by Brexiters, but the work of these economists meant that when the vote happened economic policy makers were well equipped to step in and stabilise the situation. Almost alone in arguing for the economic benefits of voting Leave was a group called Economists for Brexit, led by Patrick Minford.
Minford was a distinguished Professor of History at Liverpool University in the 1980s, when I was a student there in the 80s. While I was listening to Toxteth Community Radio he was one of the key architects of Thatcherism.
It was his economic modelling that was behind the decision to enact mass closures of steelworks, shipyards and coal mines. His work was controversial and a few years after I graduated he left Liverpool to work at Cardiff Business School, a big step down.
Minford argued that the EU was protectionist and artificially kept prices higher for consumers. Leaving the EU and signing free trade deals would make us better off because we would pay less for agricultural and manufactured goods; up to 30% less. The EU proteced jobs and wages too; wages in the UK are several times higher than in competitor countries like China or India. Leaving the EU would mean that prices and wages would fall.
In order to realise these savings he recommended the British Government sign free trade deals that allow other countries to flood the UK with cheap imports: UK manufacturing and agriculture would disappear, and the land, people, and capital that they were using would become available to the service sector to grow.
“Leaving the EU and eliminating this protection would, according to these figures, raise
service output and effectively eliminate manufacturing in the long run……. The actual making of things, manufacturing in the original sense, has contracted hugely in the UK. What the CGE model tells us is that in the absence of EU protection this actual making would largely disappear”
The combination of a fast growing service sector and lower prices for food and manufactured goods would make us all better off, at the expense of blue collar manual labour. They would either get a degree and join the middle classes or work in non-traded manual jobs – uber drivers and shelf stackers – until technology took those jobs away too.
There are a number of problems I have with Minfords analysis but the greatest of them is the way he assumes that the entire UK manufacturing and agricultural workforce can transform magically into white collar workers without massive disruption and unemployment. Exactly the disruption and unemployment we experienced in the 1980s.
It’s hard to tell how widely Minford’s ideas are shared across Government. Over 40 Tory MPs are members of the Conservative Free Market Forum organised by the Institute for Economic Affairs which lobbys for Minfordian policies. For them Brexit is a massive chance to finish what Thatcher started, destroying the British working class forever.
Economists for Brexit is now Economists for Free Trade and lobbys for exactly the kind of trade deals we are striking with Australia. UK food and drink exports to the EU fell by £2bn in the first quarter of this year, so if this is the plan it is working brilliantly.
It is hard to work out what lots of Leave voters want because they all seem to want different things. Some want protectionism, some want free trade, the bloke round the corner believes that Brexit will bring about the second coming of our Lord Jesus Christ and walks around with a placard telling everyone about it.
But what they all share is a commitment to Brexit and a desire to stop any attempts to return to the EU or even the single market at all costs.
A trade deal with Australia that includes cheap hormone fed beef is incompatible with membership of the EU or the single market. The more trade deals like this we do, and the more we become dependendt on these trade deals for the food in our fridges the harder it is to ever return to EU membership.
They may be bad deals, but they tie future generations into bad deals, and in the minds of Brexit evangelists this is an advantage.
Poisoning your enemies well is a dirty tactic, but effective
Poisoning your own well to stop future generations drinking from it not so much.