Brexit: that £350m a week fantasy

12/11/2017

With money and the stalled Brexit negotiations very much in the headlines, Booker takes on the £350 million fantasy, observing that its sudden resurgence is yet another measure of the weird unreality which now pervades our politics.

This occurred when NHS head, Simon Stevens, tried to persuade us that the vapid slogan painted on the side of the Vote Leave bus in last year's referendum campaign was a firm "promise" made by Cabinet ministers such as Boris Johnson. Now, in his view, they were now bound to honour it, "because it was this which had persuaded many people to vote for Brexit".

Yet, back in May 2016, well before the referendum, Booker and I were spelling out just what make-believe this figure was.

It was based on the fact that our yearly contributions to "EU institutions" were then being officially given as "£17.8 billion". But in reality £4.9 billion of this never left our shores, because it constituted our EU budget rebate, retained by the Treasury. So the sum we actually handed over was only £12.9 billion.

We were then already being assured that we would continue paying £4.5 billion a year to maintain the existing level of subsidies to farming and regional funding. Equally guaranteed was the £1.2 billion given to private bodies, such as universities, for research.

If we no longer had to contribute the £1.2 billion we were then sending to the EU for its overseas aid programme, we would still have to carry on spending this ourselves, as part of that proportion of our GDP we are now committed to spend on aid by our own UK law.

Although we might no longer be giving £2 billion a year to 27 EU agencies, we were suggesting that we might well have to spend more than that on setting up our own version of those bodies, such as the Medicines Agency, a considerable money earner for the UK now due to leave London, to duplicate much of their work ourselves.

We further pointed out, even then, that we would be legally liable for our share of the total £300 billion of future EU spending to which were committed by decisions to which we had already formally agreed as an EU member, amounting to some £5 billion a year. "Any attempt to wriggle out of those commitments", Booker wrote back in that May, "would be a highly-contentious issue in the forthcoming negotiations". And this is exactly what has happened.

In truth the idea that we could save "£350 million a week" to spend on the NHS always was a complete fantasy. And, says Booker, the fact that it is still being intemperately argued about today as if it ever had any reality is only further evidence that, when it comes to matters Brexit, most of those we hear prattling about it, led by our politicians, have simply no idea what they are talking about.

The worst of it though is that Vote Leave, in profiling these mythical savings, has poisoned the well, when it comes to paying money to the EU. Even if there are no significant savings to be had, the possibility that we might be paying significant sums of money to the EU, after Brexit, has become so toxic that Mrs May seems frozen into immobility.

Yet, as I was reporting in April 2016 it was always the case that the EU was going to expect payments from us, particularly in terms of the reste à liquider (RAL) liabilities which are becoming a central feature of the Brexit negotiations.

Ironically, only now is David Davis talking of pragmatism but, if right at the beginning of the talks it had been recognised that there would be sums to pay, including RAL, we might be a lot further forward than we are now.

Piling on the irony, the Booker column in May which had him condemning the £350 million lie never made it to the Telegraph website. But preserved for prosperity on the same say is an absurd article by Tim Ross, the paper's "senior political correspondent", which had Alexander Johnson arguing that: "The EU wants a superstate, just as Hitler did".

By coincidence, David Cameron was unveiling a new poster based on the previous month's Treasury report claiming that Brexit could cost six percent of GDP by 2030. The poster showed an envelope on a doormat, with the warning that leaving the EU would cost "£4,300 for every household".

The indications are, though, that a "no deal" Brexit, which had the UK crashing out of the EU, could cost us anything up to 40 percent of GDP in the first year, this huge sum arising if – as is widely predicted – trade grinds to a halt. The economic models which measure long-term effects simply don't look at the consequences of massive short-term perturbations.

True to form, though, this week's Sunday Telegraph has a preview of a report from the Economists for Free Trade group, a 16-strong group which includes the infamous Patrick Minford.

After factoring in "long-run gains" including a fall in prices after abandoning EU tariffs on goods from outside of Europe, "improved export performance", less red tape, and "an end to the annual EU subscription of £10 billion", the group expects an additional three percent of growth by the mid-2020s.

This, we are told, could deliver a future chancellor – by some strange alchemy – a "£65 billion windfall from Brexit", comprising a cumulative figure of £40 billion bolstered by additional borrowing of £25 billion that the government would be able to make.

At the moment, there is no more substance to these claims than there was to the spurious £350 million-a-week savings claim, making the figure typical of the fantasies concocted by the extremes of the "leave" movement.

It cannot be a coincidence here that, while the Brexit financial settlement is variously estimated to cost the UK as much as £60 billion, this group magics up £65 billion in the space of five years which, from the look of it, relies on making no payments for RAL or any ongoing subscription fees.

Equally, it would appear that, despite paying nothing at all to the EU after the "transitional period" and thus not agreeing a financial settlement, and despite the effects on trade of losing the benefit of most of the EU's trade agreement, we can still expect a net growth in exports within five years.

Under normal circumstances, such claims would attract derision – as indeed should have the "side-of-the bus" claim of £350 million a week. But these are no normal times. As long as an advocate group can muster sufficient "prestige" to gain recognition from the targeted legacy media, it can be assured of an uncritical hearing from sympathetic – if gullible – hacks.

Thus, we do not have a debate as such, in the sense that we are getting the progression of thesis to antithesis and then synthesis. We are assailed by a torrent of inchoate antagonism – where the protagonists talk past each other, without engagement. And from this mêlée, no settled conclusions ever emerge. The result is unending noise, from which the only intelligent response is retreat.

In such a context, one side can so easily offer any figure for Brexit, plus or minus, that takes their fancy. We can have as many different figures as there are bodies to produce them, and media outlets to publish them. Nothing matters other than the ability to put the favoured outcome before the public, holding it in the headlines for as long as possible until it is replaced with another, and another … and so on, ad infinitum.

Eventually, reality will take a hand, by which time it will be too late. And if that reality sees traffic to and from the ports stalled, with no movement of goods, we will not have to read about it in the headlines. We will see it in the empty shelves of our supermarkets.