Both Boris Johnson and Keir Starmer chose to address the Confederation of British Industry conference this week. But far more interesting than the party leaders’ paeans to profit or to Peppa Pig were the comments made the same day by the CBI’s new Director General, Tony Danker. Greeted with pearl-clutching in the Daily Mail, rentagob Tory backbenchers providing the copy, Danker has taken careful aim at forty years’ worth of neoliberal economic policy in Britain, specifically calling out the loss of manufacturing jobs under successive governments. And although reported as an attack on Thatcher, Danker picked his words more carefully: “Since the 1980s, we let old industries die… We have spent the past decades living with these consequences.”

It’s not something Labour like to talk about, but if deindustiralisation under Thatcher is notorious today – informing, still, how much of the North of England is perceived – its second round, under New Labour, was also far-reaching.

Source: ONS

Between 1979, when Thatcher entered office, and 1990, when she left, employment in manufacturing fell by 1.8m. But then between 1997, when Labour’s Tony Blair became Prime Minister and Gordon Brown’s exit from No.10 in May 2010, manufacturing employment fell by 1.7m.

The only periods of sustained increase in manufacturing employment occurred under Conservative Prime Ministers: rather weakly, rising around 200,000 in the nine years from 2010 to 2019; and then more dramatically under John Major, rising 190,000 in just four years from 1993 to 1997.

Deindustrialisation

The big picture here is well-known: deindustrialisation from the late 1960s onwards was common to the developed world, with major industries, from coal mining to car manufacture, shaking out jobs on a huge scale. Thatcher’s destruction of industrial employment was more dramatic than elsewhere, but not completely out of line with the general experience. The second wave of deindustrialisation in the West, apparent from the mid-1990s onwards but accelerating from the 2000s, then helps account for the loss of jobs under New Labour.

An overvalued pound – itself the symptom of government monetary policy – is common to both experiences, with recovery in employment being particularly tied, in the 1990s, to the crash in the value of the pound following Britain’s exit from the Exchange Rate Mechanism.

Of course, under New Labour these lost manufacturing jobs were (in effect) replaced with service sector employment, in both the public and private sectors. Overall employment remained high until the Great Financial Crisis, in striking contrast to the searing rises in unemployment under Thatcher. But the swap of typically better-paid, more secure manufacturing work for typically lower-paid, less secure (private) service sector work was keenly felt and, despite some efforts at geographic redistribution under Labour – whether directly via the old Regional Development Authorities or indirectly via public sector employment – the relative weakening of economies outside of London and the South East became all too apparent once the boom of the 2000s ended.

For the entire period, however, until the last few years, the general direction from government has been consistent: that government itself should, as far as possible, “just get out of the way”. At most, it could compensate for “market failures” in the provision of some essentials – basic infrastructure, say, or education. Labour was more expansive in its spending; the Conservatives, and the Conservative-led Coalition from 2010-15, rather less. When Gordon Brown, as Chancellor the Exchequer, told the CBI conference in 2005 he wanted business regulation to be “not just a light touch but a limited touch”, he was simply repeating the neoliberal commonsense of the time – and no doubt his audience would have nodded along with it.

The contrast with Danker’s argument could not be clearer. Noting the “shot of redemption” new industries give to deindustrialised regions, here he is on making “levelling up” work:

This might be a new line from the head of the CBI, but simply saying the market will fix this is simply not good enough. There are free marketeers in the debate who say government should never play an active role like this. But I don’t know a country in the world – including, and especially, the United States – where governments aren’t active in economic geography.

If we go back far enough we can find heads of the CBI disagreeing with Margaret Thatcher during the early years of neoliberalism. In spring 1981, its then-Director General promised a “bare-knuckle fight” with government over their economic policy. The larger companies the CBI represented were in some “panic” from the 1980 onwards about the impact of mass unemployment and industrial recession on their own profits. Thatcher, for her part, tended to view the CBI at the time as corporatist dinosaurs – bureaucratic managers as responsible for Britain’s presumed decline as the over-mighty trade unions. But for much of the last three decades the CBI has been a reliable defender of the free market doctrine.

It’s a sign of the turn against the neoliberal rules of the game – apparent since the financial crisis, accelerating as the pandemic erupted – that the CBI’s director today will make such a pointed criticism of them, and of how they have failed the last four decades. Would that either main party leader had the same confidence.

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An interesting debate was opened by Labour’s MP for Neath, Christina Rees, in Parliament’s Westminster Hall last week on Italy’s “Marcora Law”. This is the legislation introduced there in 1985 to allow workers’ threatened with redundancy the option of exercising a right to purchase the company. Two government-administered funds provide the loan capital needed to the workers, and the law has been credited with saving 13,000 jobs in the years after the financial crisis.

There are two points to note here. First, although co-operative and worker ownership sector in the UK is a fraction of those in Europe and North America, it has been growing rapidly in the last few years, helped along by some recent changes to legislation. 250 new employee-owned business have been established since 2019, taking the total to 720 across the UK: a fraction of the 2m or so registered businesses in the UK, but including at least one very large employer, John Lewis Partnership, and with notable growth in manufacturing firms in particular.

Second, there is a potential here for a government outside the EU to do something radical with this. The original Marcora Law provided for significant government support to those wanting to move a threatened firm into employee ownership, with the Italian state offering to put in up to three times as much additional start up capital as the workers. The European Commission ruled that this was in breach of EU competition law, handing (in its view) an unfair advantage to worker-owned businesses relative to more conventional ownership. But the reality is that this was a clash of two very different conceptions of what a business is. The Commission took (and takes) a pure neoliberal view: that a business is there to benefit its shareholders only, and any one kind of shareholder – someone’s granny with share certificates; your ISA; Black Rock – is much the same as any other. There is, in this view, no case for offering cheap loans to any one type of business over another, solely on the basis of its form of ownership.

That, of course, radically reduces the appeal of worker ownership, and opens up the standard neoliberal objection. If you are employed by a company, you are exposed only to one kind of risk – that the business could fail, and you lose your job. But if you are not only an employee, but a shareholder in the company, you face two kinds of risk: if the business fails, you lose your job – and also whatever capital you have invested. It’s this double risk that tends to weigh heavily against worker buyouts, particularly where employees also face having to borrow money at standard commercial rates.

But there is another way to view a business. Instead of seeing a firm as operating solely for the benefit of its shareholders, we could view it as a social institution in its own right: that whatever a business does includes not only the profit it makes, but the quantity and quality of the work it generates, its impact – good or ill – on the environment, the other businesses and employment it sustains through its purchases, and so on. The evidence that worker ownership performs better on these broader measures of successes is clear: worker-owned firms tend to be more productive, tend to create and sustain more and better jobs, and tend to act as better stewards for the environment.

In this view of a firm as a social institution, government could become a necessary partner, acting as guardian of the broader interests of society alongside those of the workers and any additional shareholders. It would be natural for this additional partner to also take a stake and offer support to a company working in this way. This would be a breach of the neoliberal conception of the company, but would be far closer to the actual

Neoliberalism in law

United Kingdom company law doesn’t think like this. The last major change was the Companies Act 2006, enacted by the Labour government, which did create a weak requirement for directors to “have regard to” environmental and social impacts, but left the basics of shareholder supremacy in place, turning existing common law practice into hard legislation. And for as long as the UK was in the EU, this neoliberal bias reinforced by the EU’s own strict laws and regulations around competition and ownership. Steering around them was possible, but would be an additional hurdle for an economy like the UK if it sought to significantly boost worker ownership.

But outside of the EU, and now subject only to the loose constraints of the EU-UK Trade and Cooperation Agreement, a UK government has more freedom to intervene in the domestic economy. Support for worker ownership could be radically improved, and with the option for further support for specific areas and regions of the country. Cheap capital could be provided at scale for employee ownership schemes; and the opportunity for major expansion is there, too, with potentially thousands of viable small businesses facing closure or sale as their baby-boomer owners approach retirement: nearly two-thirds of UK small business owners are over 50, and two-thirds of them have no succession plan for their businesses. It’s the sort of thing that might appeal to the supposedly “Brexity Hezza” in No.10, but if the government’s response to Rees is any guide, they’ll let it slip. Time for Labour to seize the moment?

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Robert Skidelsky

Will Hutton

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1. Spending on education in the UK, which includes private school education and university fees, fell by more than spending in any other category other than ‘miscellaneous’. Fewer households can afford private education and there has probably been a slight reduction in the uptake of the offers of places at UK universities. State school education spending has fallen, per child.

2. Business investment in the UK fell sharply in the fourth quarter of 2019 to become as low as it had last been relative to GDP during the great financial crash of 2008. There were especially large falls in transport investment, down from £7.0bn a year around June 2016 to reach below £4.0bn in 2019.

3. By the fourth quarter of 2018, and for the first time in any quarter since at least 2016, productive output in the UK economy fell in all main production areas. This contrasts with overall slow growth before 2016. Recovery from the Great Recession of 2008 had been underway; but the 2010 coalition choice to pursue austerity meant that the recovery was the slowest and shallowest ever recorded. Clearly, the UK is no longer even in mild recovery.

4. The ONS also reported “the fourth consecutive quarter-on-quarter fall in business investment… the first time this has happened since the economic downturn of 2008 to 2009”.

5. On the UK balance of payments, the situation is now awful: “The UK current account deficit widened by £0.7 billion to £23.7 billion in Quarter 4 (Oct to Dec) 2018, or 4.4% of gross domestic product (GDP), the largest deficit recorded since Quarter 3 (July to Sept) 2016 in both value and percentage of GDP terms.” This particular ONS report went on to highlight the fact that: “UK investors have disinvested in overseas equity securities in the portfolio account throughout 2018, resulting in an overall disinvestment of £174.2 billion in 2018 – the largest on record.” Overseas ‘investment’ was at a maximum during the height of the British Empire.

6. On the economy as a whole: “Real UK gross domestic product (GDP) increased by an unrevised 0.2% in Quarter 4 (Oct to Dec) 2018, while the 1.4% increase in 2018 is the weakest annual growth rate since the financial crisis.” This very small growth was only made possible by the UK borrowing more from the rest of the world. The employment rate rose again to a record high of 76.1% with the “unemployment rate falling to 3.9% – its lowest level since January 1975”. The economic woes of the UK are not caused by too few people working. Rather, the work being done is unproductive, the wages being paid are too low, and investment in the UK is drying up – so we depend yet more from the kindness of strangers and borrow.

7. The statistics released on March 29^th 2019 revealed “an unprecedented ninth consecutive quarter of households being net borrowers, although their net borrowing decreased to 0.8% of GDP from 1.4% in the previous quarter”. The ability of UK households to borrow yet more to make ends meet is drying up. Furthermore, in this release it was revealed that: “Financial corporations experienced an unprecedented sustained fall in net acquisitions of shares issued by the rest of the world in all four quarters of 2018, resulting in the largest annual fall since records began in 1987.” Since the third quarter of 2016 – since the Brexit referendum result – every sector of the economy has been in deficit.

Households in the UK managed to maintain their spending levels during 2017 and throughout 2018 through resorting to unsecured loans in both of these years. The UK is now entering uncharted economic territory.

8. The ONS announced on 29 March 2019 that they will be making “confidential assessments of government and devolved administration policy proposals (as explained in our classification process); we do not announce or discuss such policy proposal assessments as a matter of course in order to afford policy-makers the space to develop policy”. If you do not know what that means – well, you are not supposed to know, and you will not be told what they are doing if you are interested. In that same document the ONS confirmed that they had completed their work on estimating the income the UK government now receives from making visa charges to people travelling to the UK from overseas. These charges have increased substantially in recent years.

9. The income, capital and financial account and balance sheet data for monetary corporations, other intermediaries, auxiliaries, insurance corporations and pension funds were released on March 29^th. The seasonally adjusted data show the following levels of gross operating surplus for such UK businesses in the last five quarters (a fall from over £16bn to under £14bn in 15 months). 

Gross operating surpluses (selected UK financial businesses)

Source: UK Economic Accounts: sector – financial corporations, ONS. 29/3/2019

10. On 28 March the ONS reported on housing price falls and explained that “The total value of residential property transactions (unadjusted for inflation) decreased most in London in the year ending September 2018.” The UK housing market is in a slump. Transaction levels have collapsed. The price falls are still led by London, where the vast majority of UK housing equity resides. As of 2017, UK banks rely on the value of the homes they have lent on to meet their Basel III stability requirements for minimal capital adequacy.

11. On 27 March the ONS reported that: “Since 2012 to 2014, there have been statistically significant increases in the inequality in Life Expectancy in England for males and females at birth and at age 65 years; the inequality in female Life Expectancy at birth had the largest growth, rising by 0.5 years. In England, the growth in the female inequality came from a statistically significant reduction in Life Expectancy at birth of almost 100 days among females living in the most deprived areas between 2012 to 2014 and 2015 to 2017, together with an increase of 84 days in the least deprived areas.”

12. A day earlier, on 26 March, the ONS released a report showing that a quarter of children aged 11 to 16 (in England, in 2017) with parents “struggling to get on” were living with a mental disorder, as were just under a fifth (19%) of all those children aged 5 to 10. The ONS reported the recent findings of the Children’s Society to help explain this: “Reductions in family income, including benefit cuts, are likely to have wide-ranging negative effects on children’s mental health.” The situation will have worsened during 2018 as reductions to these family incomes continued. We have no idea how the children of the UK will, as a whole, be effected by the events reported above. There is little reason to be optimistic. But, as I write (April 1^st), there is still time to avert a hard Brexit.

This piece was originally published in Public Sector Focus here. Photo credit: Flickr / Luc Mercelis.

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All imperial countries and their leaders have problems when their empires disappear, and they no longer have the forced tribute or inequitable trade deals they have depended on. Even when previously colonised people come to work for their former masters and build up the ‘mother country’, they may find a distinct lack of hospitality and even face deportation in their old age. So, as the sad tragedy known as Brexit moves into its assumed final stages, it is time to revisit the British Empire and its ending – Brexit being perhaps the last gasp of this empire.

Brexit is a gasp of rancour which seems to have brought to the surface much resentment, hatred, and ill-informed debate. Even Theresa May could not possibly have envisaged a situation where, faced with headlines such as “Officials warn of putrefying piles of waste after no-deal Brexit”, and the current UKIP leader writing to the Queen telling her she had committed treason by signing the Maastricht Treaty, she (May, not yet the Queen) is forced to return to the EU in late February, to try to renegotiate that infamous withdrawal treaty that in January Parliament had rejected and the EU had said it would not renegotiate.

May will not be helped by her international trade secretary announcing (to a Conservative think-tank) that EU countries would now be keen to negotiate due to weaknesses in their economies. Nor will she be helped by what was quickly labelled as the ‘Malthouse compromise’ on the backstop, after a junior minister (Kit) who claims (in Who’s Who) that his hobbies are baking bread and watching others dance and play.

This article is cross-posted from the LSE British Politics and Policy blog. To read the full piece, click here. 

Photo credit from previous page: Flickr / Giles Turnbull

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However the Brexit crisis is resolved, the resolution opens the possibility of a general election and a Labour government. Whether still a member of the European Union or in some other economic and political arrangement with Europe, the new government would inherit an unbalanced and stagnating economy. Our purpose is to suggest the most important policies the new government might implement.

From the advent of the coalition government in 2010, long before any serious discussion of a referendum on EU membership, the British economy fluctuated between stagnation and recession due to the growth-depressing effect of austerity. If Britain leaves the European Union and that exit has a negative economic effect, it will come atop the stagnation of austerity. In addition to any Brexit effect, many commentators foresee instability in global financial markets.

Thus, a Labour government will find itself in the throes of three economic threats: 1) the certain and debilitating legacy of almost ten years of Tory designed and implemented stagnation; 2) potential recessionary pressures arising from continued uncertainty as Brexit drags on, or a sudden shock if it ends badly; and 3) the possibility of global financial turbulence.

For each of the three there exist policies to mitigate the negative effect on the UK economy. One of the great ideological successes of Conservative governments since 2010 has been to convince people and the media that the performance of our economy reflects the behaviour of markets, over which public policy has limited impact. Rejecting this bogus naturalism will guide the economic management strategy and tactics of a Labour government.

The insight that fiscal and monetary policies have a major impact on the performance of the macroeconomy was a central message of the Keynesian Revolution. Economic downturns and stagnation result from short run failures of demand that typically result from the instability of private investment. As Keynes famously wrote in The General Theory, when business expectations “are dimmed and the spontaneous optimism falters… enterprise will fade and die”. If the optimism that drives new private investment is not yet dead, it is certainly on life support. A decade of austerity and Brexit uncertainty brought on by a Tory government will leave to a Labour government the task of rejuvenating our economy.

Economic Performance, 2008-2018

Central to the justification of austerity is the doctrine that economic growth arises naturally from the private sector. The doctrine promotes the theoretically suspect argument that fiscal deficits create a barrier to private sector exuberance. Empirical evidence refutes this naturalisation of the growth process.

Over the eight years 2000-2007, the UK economy grew at an annual rate of 2.5% (0.6% quarter on quarter). This eight year average prior to the global crisis of 2008-2010 was lower than the average of almost 3% for the last fifty years of the 20th century. By any reasonable reading of past trends, the potential long-term rate of growth of the UK lies between 2.5 and 3%.

We chose to err on the low side and take the lower limit 2.5% as our benchmark for what the economy could have achieved in the recovery from the 2008-2010 crisis. The benchmark is doubly modest because the recovery would have occurred at a time of severe underutilization of capacity, allowing for several years of expansion at above potential rates.

The chart below shows the gap between potential and actual performance during the austerity years after the 2010 general election. The left axis measures GDP at 2010Q3 prices (the first full quarter of the Tory-led Coalition government). The dashed line traces potential GDP, based on the 2000-2007 trend growth rate of 2.5%, while the solid line reports actual performance. The right axis measures the difference between potential and actual.

The diagram conveys a message of massive policy-induced underperformance. By the third quarter of 2018, after eight full years of austerity fiscal policy, the UK economy stagnated at seven percent below its potential. Accumulating the under-performance over those eight years, the total comes to £516 billion – more than the entire GDP achieved for the last quarter in the chart.

This loss of the equivalent of one quarter’s worth of GDP did not result from bad weather, nor from extra holidays due to royal weddings. The loss – £540 billion in current prices, or £8200 per capita – resulted from a conscious policy: austerity. It is not an estimate based on future speculation, nor a guess derived from an assumption-laden model. It comes from actual performance under austerity compared to what the UK economy consistently achieved over the previous 60 years.

Underperformance of the UK Economy, 2010-2018

Policies to Reverse Stagnation

As both circumstances demand and the Labour leadership has committed itself, the first step for a new government is to end austerity. That will prove an easy task.

More difficult will be building on recovery to diversify and balance the UK economy after eight debilitating years.

At the time of writing, we cannot say with any certainty what will be the outcome of the Brexit process following the 2016 referendum. Brexit will make the task of rebuilding the economy more difficult, as there is no Brexit model which does not cause harm to the economy compared to remaining in the EU. This has been shown by the government’s own analysis. The reasons for this are obvious from the most cursory examination – Brexit will reduce or cause friction in trade, additional checks and paperwork will be introduced as standards have to be policed and tariffs collected, the services sector with the EU will decline and investment in the UK by large companies wishing to trade with the EU will be deterred.

On the government’s figures, it is estimated that a Brexit deal based on the 2018 White Paper would cause GDP to be 2-4% smaller in 15 years’ time than it would have been without Brexit.[1] For ‘no deal’, this shortfall is estimated to be either 7.7% or 9.3% of GDP, depending on what happens to migration arrangements. Indeed, it seems that Brexit uncertainty has already depressed our economy; the Centre for European Reform estimates the cost of this up to September 2018 as 2.3% of our GDP.

There are two tasks: enacting a short-term stimulus to bring the economy back up to its potential performance; and implementing a medium-term investment programme to increase that potential. These require different instruments. Ending austerity will prove the simpler task; a new government can achieve it within existing institutions and over a short time period. Following practice well-established in the pre-neoliberal era, current expenditure provides the tool for short-term recovery.

These expenditures are clearly specified in the Labour manifesto for the 2017 general election. Almost by definition, current expenditure can be quickly increased – more funding for the NHS and care services; wage increases for public sector workers with focus on the lowest paid; and increases in transfer payments (“benefits”) through higher unemployment compensation, housing benefits and pensions. Immediately the new government would enhance increased social support payments by phasing out and replacing the disastrous Universal Credit programme.

In the medium term, the proposed National Investment Bank and Strategic Investment Board will provide the vehicle for diversification and balancing the economy. The National Investment Bank, as specified in the Labour manifesto, is the focus of a major PEF event on 7th February at which the Shadow Chancellor will speak.

Conclusion

When economic disaster strikes, government policies can and have in the past acted to moderate the impact and facilitate recovery. Should there be a “Brexit hit”, the same will be true – active management of the macroeconomy can moderate and contain the negative impact. If Brexit is avoided, the task simplifies: reversing austerity in the short-run and implementing a medium- and long-term strategy of rebalancing our economy.

[1] Taking the 50 per cent non-tariff barriers (NTB) sensitivity estimate.

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Today (I write on Monday evening) Speaker Bercow has agreed to accept a motion from Labour, the Democratic Unionist party and other opposition parties, to debate a motion charging the government with contempt of Parliament, prior to the upcoming 5 days’ debate on the Prime Minister’s Brexit deal.  This potentially generates yet another mini constitutional crisis, between government and Parliament.

The House of Commons had passed a motion on 13 November requiring the government to publish in full the legal advice on the Withdrawal Agreement provided to it by the Attorney-General, Geoffrey Cox, a Brexiteer barrister of colourful legal and Parliamentary career, whose summary on Wikipedia merits a quick visit by those not easily offended.  This motion had passed with the abstention of Conservative MPs, given the government Whips’ fear that they would be defeated with the DUP ‘defecting’.  This may be seen, with hindsight, as an error of judgment.

The traditional view of the role of the Attorney-General as legal adviser to government is that his or her advice is covered by lawyer-client privilege, which means that government may keep it confidential, and Parliament generally cannot require it to be published.  The client (but not the lawyer) may waive this privilege.

In other contexts, the British courts have given a broad remit to legal privilege – it includes, said the House of Lords in Three Rivers District Council and others (Respondents) v. Governor and Company of the Bank of England (Appellants) (2004) advice on how the client might best present their evidence, as well as strictly advising on the legal issues concerned.

So assuming that Geoffrey Cox, as Attorney-General, was discussing with Cabinet colleagues the presentation of the government’s Brexit “case” to Parliament and the public, as well as advising on any purely legal implications, was this covered by legal privilege?

I see that former Labour Lord Chancellor Charlie Falconer is tweeting that the Attorney-General should indeed yield to the House of Commons:

Attorney General is fundamentally misstating the Constitution. The Commons and not the AG is the ultimate arbiter of whether the full advice should be disclosed. If the Commons thinks it should AG cannot override that by his belief it’s not in the public interest to do so.

— Charlie Falconer (@LordCFalconer) 3 December 2018

He’s been ordered to produce the full Advice by the Humble Address. He should not await a motion for contempt before regarding himself as forced to comply. The Attorney General of all people should comply with binding orders whether it be of the courts or Parliament. https://t.co/MQ2BrV7WDS

— Charlie Falconer (@LordCFalconer) 3 December 2018

Well, there may be grounds for distinguishing this case from others – such as then Attorney-General Peter Goldsmith’s (changing) advices on the legal basis of the Iraq War – in which governments of different political persuasions have insisted on legal privilege.  In 2007, the Labour government published a consultation paper on the roles of the Attorney-General,

“1.37 On questions relating to the legal advice the Attorney General has given to Government, accountability is subject to considerations of confidentiality and legal professional privilege. However, the Attorney General is sometimes called upon to advise Parliament itself, particularly on questions of Parliamentary privilege, the conduct and discipline of Members, and the meaning and effect of proposed legislation.”

And again,

”2.9 Furthermore, it is argued, the Attorney General’s advice, as well as needing of course to be honest and authoritative, is advice to a particular client (the Government) on how its policies may lawfully be achieved, including advice on the legal risks attached, the prospects of successful challenge and so on. It is, like other legal advice, subject to legal professional privilege and is not generally published. In this way, the Attorney General operates like an in-house lawyer…

2.10 However, some commentators have suggested that the Attorney General’s advice to Government should not (or not always) be treated in the same way as legal advice given to a private organisation. The Government is not a business and the relationship of the Attorney General to the Government is arguably of a different order to that of other in-house lawyers. This raises the question of whether, at least for some purposes, “the public” (or Parliament), rather than the Government, should be treated as the Attorney General’s client. Lord Bingham has said:

“There seems to me to be room to question whether the ordinary rules of client privilege, appropriate enough in other circumstances, should apply to a law officer’s opinion on the lawfulness of war; it is not unrealistic in my view to regard the public, those who are to fight and perhaps die, rather than the government, as the client.”

Well, Brexit is not quite war, but like war, it shapes the country’s future in more profound economic and constitutional ways than other lesser events.

So where does this lead us and leave us?

In general principle, the government appears to me to have a strong case, from precedent, that legal advice and explanation, including on presentational issues to Parliament, is covered by legal privilege and that the House of Commons cannot override this.

However, since the government did not ask its MPs to vote against the motion requiring the full advice to be given to the Commons, there is clearly an argument that the privilege has been waived.  Since the privilege is that of the “client” (the government) and not of Mr Cox as legal adviser, I would be surprised if he himself were to be found guilty of contempt.

Moreover, the facts of the withdrawal Agreement ‘case’ do offer an opportunity for Parliament to force the issue and win a broader right of access to legal advice than hitherto.  For example, there could be a new distinction drawn between legitimate legal advice on a matter of pending litigation by or against the government, where legal privilege would still apply – and legal advice on matters of general national interest where no immediate specific legal proceedings are involved.  Thus, general legal advice on war, or trade agreements or other international conventions (including the tactics for presentation to Parliament or public) would be disclosable to Parliament as well as government, unless government could adduce a specific overriding reason why there was a need to withhold.

Another thought – the government claims that Parliament already has the essence of the full “legal advice” before it.  But as David Allen Green, the Financial Times’s legal eagle has pointed out (once more, of course, via twitter!), the 43 page document put before Parliament does not even claim to be legal advice in any shape or form.  He imagines the discussion:

“What shall we call it, Attorney General? Advice?”

– No

“Summary of advice”

– No, avoid “advice”

“Legal analysis”

– No

“Legal comment”

– No

“Legal description”

– No, avoid “legal” too

“Essay crisis copy-and-paste job?”

– It’s not even that

“Position”

– Ok, just about

— David Allen Green (@davidallengreen) 3 December 2018

In fact, it’s simply entitled “EU EXIT:  Legal position on the Withdrawal Agreement.”  It’s not a ‘summary’ of legal advice, nor does it show sign of any meaningful communication between lawyer and client.  Maybe this opens up another front – that the Attorney General was not giving legal advice to government, and that no legal privilege can attach to a general political discussion on a generalised “position” that is no more than a jobbing summary of a long document.

The House of Commons of course can vote (if the majority is there) to find ministers in contempt, even if this stretches precedent.  We can sense a government rapidly losing its life-force.  In Parliamentary constitutional terms, it’s a potentially revolutionary situation.  We can even imagine the courts being handed this hottest of potatoes to adjudicate on – a dispute over privileges between Executive and House of Commons. But surely, in our common interest, it’s time for Parliament to take control.

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Willie McBride, captain of the famous 1974 British Lions rugby team, famously told his team mates before a match with South Africa, to “get your retaliation in first”.  Operating on the same principle, the Chancellor busily gets his excuses in first in the run-up to his budget on 29 October.

Recently, Mr Hammond promised to “pave the way” for the end of austerity should there be a good Brexit deal.  This good deal, he maintained, might bring a double bonus. The first bonus in question would come from improved growth following the good deal, with increased growth generating increased revenue.

The second bonus will arise from something Mr Hammond calls a “fiscal buffer”.  To quote the Chancellor himself on this unfamiliar concept (which the Guardian identifies as £15 billion), “As uncertainty is unwound and we’re in more favourable circumstances, logically, one would need less of a fiscal buffer and some of that could be released for to support [sic] the spending envelope or to deliver tax cuts”.  This term, which the Chancellor may have created for the occasion, seems to mean little more that not spending.

If my interpretation is correct, I can translate his sentence into simple English — “when the Brexit outcome is clear I will authorize more spending or lower taxes”.  From this translation we can derive a clear message.  The budget date is 29 October.  The probability is nil that Brexit “uncertainty is unwound” by 29 October.  Therefore, using Mr Hammond’s logic, the “favourable circumstances” necessary for more spending or less tax will not occur in time for the budget.

Simply put, Mr Hammond has got his excuses in first.  To paraphrase Winston Churchill (Mansion House speech 10 November 1942): “29 October will not be the end of austerity, it will not even be the beginning of the end of austerity; but it will be, perhaps, my excuse for more of the same”.

The Chancellor has no “fiscal buffer”.  No such concept or category exists in the Treasury.  The “savings” that the Guardian credits Mr Hammond as accumulating “this year” do not exist.  This conjectured £15 billion is nothing more than austerity itself – not funding public services.  However, the imaginary Brexit dividend is, indeed, a “double bonus”.

First, it serves as propaganda to support the Prime Minister’s fight for votes on her soon-to-emerge agreement with EU leaders – “vote against the PM’s plan and you undermined public finances”.  Along with this transparently bogus bonus goes the second, Mr Hammond’s ready excuse to continue austerity – “the Brexit uncertainty remains so additional spending will be reckless”.

The putative Brexit uncertainty is an ideological gift that keeps on giving.  In reality, if the May government does not fall, Brexit “uncertainty” will continue far beyond 29 March 2019, providing justification for austerity till end of Tory days.

It is clear that the May government feels that it must hold out the promise of ending austerity.  Theresa May offered that hope in her Conference speech and now her Chancellor repeats it, neither telling the public how it would be achieved.

They do not tell us how because the answer cannot be spoken.  Austerity will end when the Tory government ends and a progressive one replaces it. It’s that simple.

Photo credit: EU2017EE Estonian Presidency / Flickr

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Fetzer notes the scale of the cuts since 2010 in his work. In real, per capita terms, spending on welfare and social protection has fallen by 16%, education spending by 19%, and healthcare spending has flatlined – essentially cut, given the ageing population and the fact that the health service has had to pick up some of the slack left by cuts to local government and social care.

In this sense, it’s clear how austerity laid the groundwork for the Brexiters’ core strategy. The Leave campaign played on anxieties around public services with talk of Brexit freeing up an extra £350m a week for the NHS, while supporting media spat out overwhelmingly negative coverage of immigration.

In their analysis of thousands of newspaper articles from during the EU Referendum campaign, researchers from King’s College London found: “Migrants were blamed for many of Britain’s economic and social problems – most notably for putting unsustainable pressure on public services.” Little coverage was given to migrants’ tax and labour contributions to public services. This, against a backdrop of anti-migrant billboards reminiscent of Nazi propaganda.

PEF Council member Simon Wren-Lewis has written on public attitudes to immigration in light of this media coverage. He notes that in a 2016 poll, people “on balance think EU immigration is good for the economy and for British culture, and even for themselves personally”. The issue is that they overwhelmingly thought immigration was bad for the NHS.

But, as Wren-Lewis writes:

“…we know, with almost certainty, that the opposite is true: immigration creates net additional resources for public services. This is not complicated: they pay more in taxes than they take out because they tend to be of working age. But the myth that politicians and the media promulgate is that immigrants are somehow the reason access to public services has become more difficult, and they do this in large part to cover up the impact of austerity.”

Worryingly, the driving force behind the new guard of Conservative Brexiters – Liz Truss, Dominic Raab, Kwasi Kwarteng – is a vision of ‘Britannia Unchained’: a hyper-free-market version of the UK with even deeper cuts to public services in the name of neoliberalism. As Professor Tim Bale writes, the disjunction between this vision and the way Brexit has been sold  is so jarring as to be Leninist. In light of such duplicity, Fetzer’s work is a vital step in untangling the confluence of factors that led to the decision to leave the EU.

Respecting the electorate

The title of Fetzer’s paper – Did Austerity Cause Brexit? – might cause discomfort for those who feel it is patronising to link the Leave vote to anything other than voters’ informed exercise of free will.

But engagement with the deeper reasons for Brexit is a necessary demonstration of respect for the electorate – and democracy more generally – absent from much of the pro-Brexit lobby. The attempt to undermine these efforts on grounds of being ‘patronising’ is a classic neoliberal tactic, with origins in (neoclassical) economics.

Economics and individual choice

For the most part, economists see their task as not to dictate or criticise people’s preferences, as revealed by their choices. Instead, they mainly take preferences as given, and focus on the most efficient way to satisfy them. This strain of thought has an understandable, democratic appeal. We don’t want our economists to moralise!

The problem is that economics is fundamentally a ‘moral science’ – it’s about who gets what. In reality, focussing on ‘efficiency’ above other goals is not a morally neutral commitment. Another issue is that our preferences are not formed in a vacuum; they are shaped by institutions, policies, politics. If economists are forced to take preferences as given, it leaves them unable to criticise structural forces.

Economists’ focus on GDP growth, for example, might be justified by the majority of people’s desire to be richer. But this desire is not wholly innate – it is partially caused by our economic system (capitalism), the focus of government policy, and so on. If economics as a discipline is to be able to engage with these issues, it cannot rely on preferences as its sole normative input.

Neoliberalism and Brexit

Neoliberals go a step further. Markets are posited as the only institutions which can effectively aggregate people’s preferences, and thus the only morally just way to decide economic outcomes. Save for a few select cases of ‘market failure’, government intervention (be it direct or through e.g. regulation) is seen to infringe on the sanctity of individual preferences. (See Philip Mirowski’s Never Let a Serious Crisis go to Waste.)

Compare this to the portrayal of judges as ‘enemies of the people’ in the aftermath of the vote to leave the EU, and it becomes clear that Brexiters are trying to apply the same logic to referenda.

This leaves the Right an open door to manipulate people’s ‘preferences’ through, say, lying about the existence of a ‘Brexit dividend’ or conducting smear campaigns against immigrants. They can then feign an innocent commitment to enacting the ‘will of the people’, as if mass misinformation were any less a subversion of democracy.

Given this and what else we know about the Leave campaign (not least their ties to organisations engaging in voter manipulation), looking for structural forces behind the referendum result need not be patronising. Rather, it is necessary if we are to understand both our own political economy and the biggest setback to the European integration project since its inception.

Photo credit: Flickr / Giles Turnbull

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