Cummings’s state aid is scarcely a substitute for EU trade

William Keegan
·4-min read
<span>Photograph: Aaron Chown/PA</span>
Photograph: Aaron Chown/PA

Whatever one thinks of the handling of the pandemic, or of the poor contingency planning in earlier years, the one thing one cannot blame this government for is the virus itself.

Alas, the same cannot be said of the imminence of Brexit in tooth and claw, as opposed to the transition now under way. Among the “briefings” emanating from Downing Street have been suggestions that the economic consequences of Brexit will be subsumed by the undoubted economic horrors occasioned by Covid-19.

Oh no they won’t. The chaos is already building up. In Greek mythological terms – which the egregious Boris Johnson may recall – his wretched government is piling Pelion upon Ossa: that is, making things a hell of a lot worse for, let’s face it, no good reason.

And I mean no good reason. We are talking of a lot of bad reasons. The “justifications” for Brexit are falling apart in front of the government’s own eyes – eyes that, in the case of that unelected revolutionary, the prime minister’s adviser Dominic Cummings, were supposedly tested on his notorious lockdown drive to Barnard Castle.

Well, Cummings certainly appears to have rear-view vision – in his case, the view goes right the way back to the 1970s, and a vision of vast state aid for the private sector.

I have referred before to the way the origin of the U-turn as a metaphor for a reversal of government policy dates back to the winter of 1972-73, when the Conservative government under Edward Heath abandoned its policy of eschewing state aid for what were known as “lame duck” companies and went to the rescue of Rolls-Royce and others. State intervention was also favoured by the Wilson governments of 1964-70 and by cabinet minister Tony Benn in the Labour governments of 1974-79.

However, Cummings claims to be smarter than Wilson, Heath and Benn. He sees state intervention as a way of encouraging some golden future of embryonic technology companies. It matters not – just a small detail – that the last thing such companies seem to want is interference from the state.

Insofar as there is a theoretical economic justification for the massive disruption on the way from Brexit, it is that, by freeing themselves from putative constraints on state aid imposed by our membership of the EU, the Johnson/Cummings/Michael Gove triumvirate can invest public funds – difficult, by the way, to get hold of, given the other calls on the virus-afflicted budgets of Chancellor Sunak – in technologies of the future. I am reminded of that great passage in Henry IV, Part 1:

GLENDOWER: I can call spirits from the vasty deep.

HOTSPUR: Why, so can I, or so can any man; But will they come when you do call for them?

It matters not that the rules limiting the abuse of state aid in the EU were to a large extent drawn up by the British team under Lord Cockfield on behalf of the Brexiters’ heroine, Margaret Thatcher, such was her enthusiasm for setting up the single market we are about to leave.

This monstrous government is prepared to throw away vital resources in favour of the freedom to conclude worse trade deals than they already have

At this stage I should like to offer my heartiest congratulations to a Conservative government – not the Brexit-infested Conservatism of Johnson, but the Thatcher government, which, although it was responsible for many an economic disaster, at least ensured that the UK would be an integral part of the best assembly of trade deals in economic history. These, of course, are now in the process of being abandoned in favour of a series of less favourable – and, in the case of anything agreed with the US, seriously damaging – “deals”.

The ultimate irony became apparent in the recent trade deal with Japan, one of whose conditions is to limit the UK’s freedom to indulge in the state aid which is supposed to be Cummings’s raison d’etre for Brexit.

This deal is officially calculated to add 0.07% to the UK’s GDP, as opposed to the 5%-plus reduction in GDP from leaving the single market and the customs union – which we are due to do irrespective of whether Johnson in the end cooks up some kind of 11th-hour trade deal.

Think about it: think of the pre-budget discussions that take place every year over the allocation of scarce resources, often involving a fight over a mere fraction of 5% of GDP. Yet this monstrous government is prepared to throw away vital economic resources in favour of the freedom to conclude worse trade deals than they already have.

In doing so they think they are regaining “sovereignty”. In fact they are losing sovereignty and bargaining power in Europe, the US and the rest of the world.

En route, Johnson is quite content to break the law. Thatcher once proudly stated: “Britain does not break treaties.” One wonders how Johnson’s next meeting with the Queen will go. As the monarch knows only too well, the last verse of the national anthem implores: “May she defend our laws.”