Brexit: winds of change
By Pete North - October 6, 2021
We were among the first to point out that our departure from the single market would be a long slow bleed rather than a cliff edge, and though we anticipated a great many problems akin with no deal, we were not surprised that Brexit day was something of a non-event in terms of what the media was expecting. That said, the whole picture is obscured by Covid. I would have thought the more immediate consequence of Brexit would be visible in the airline industry, but with Covid having wiped out global air travel it’s something of a moot point.
Where we could have expected a similar hit is to various services businesses which again have been hit by Covid first. It won’t really be until next year that we start to see clear consequences, but even then the picture is obscured by Covid. Many of the problems we face are, to one extent or another, replicated in the EU, not least the shortage of farm workers, meat workers, HGV drivers etc.
There we see that Brexit most certainly has had a limited effect. There are other factors influencing the decision of EU workers for staying away. Brexit has not deterred millions of Europeans from making Britain their forever home. More than anticipated. But that limited effect combined with Covid, was just enough to throw industries with structural problems, accumulated over a decade or more, into chaos.
As it happens these are industries that very much needed to change being that the whole model was unsustainable, having used up the entire pool of available labour. As we outlined in recent months, the food and haulage sectors have been almost entirely geared to exploit cheap foreign labour, cutting every imaginable corner in the process. What we’re left with is a monstrous food industry divorced from its consumers and producers and where any local link to where food is produced is eliminated entirely.
As much as that industry is now teetering on the brink, facing shortages of skilled workers, it will also struggle to find veterinary professionals qualified to do the job who actually want to do it. We will see further serious breaches of food standards in the EU and across the EU. The sector needs a complete rethink. Change is coming whether they want it or not.
This will not only disrupt food production. As pointed out recently, recycling is a sector that may not even survive. Facing the perfect storm of cheap labour shortages and high energy costs, combined with export bans, it’s hard to see how recycling is any longer viable. That then means massively increased costs for carboard and packaging materials which will have a major impact on our Amazon consumer culture. Amazon is going to have to rethink its policy of packing a small bottle of fluid in a box the size of a large Labrador. No bad thing, but all the same, it will impact on household spending.
It’s not just the grunt work that will suffer either. During my time at Airbus I couldn’t help but notice how much of an international business it is. There was a time when most of the engineers at Filton would have been born locally. Now it relies on CAD professionals from France, Germany, America, India and Indonesia. The industry looks globally to fill vacancies instead of training. With the industry on its knees, it now has a surplus. That’s a lot of middle class mortgages at risk. Looking forward, it’s still going to be difficult to ascertain exactly what Brexit is and isn’t responsible for.
The other major change in the mix is in the world of work. Though Boris Johnson orders us to “get back to work”, office workers who see no good reason to return to the daily drudgery of commuting will no doubt push back. Property portfolios (ie Telegraph Media Group) may want their buildings full, but agile businesses have realised they don’t need a large centralised headquarters. Things may wobble back to a semblance of normality, but home working is a genie that won’t go back in the bottle. My other half was in post only two weeks before lockdown hit. She has established herself and her role while working entirely from our living room. There isn’t much of a case for her returning.
Moreover, if the government really is serious about Net Zero, or just a more practical desire to reduce congestion and the number of largely pointless car journeys, then home working is a big part of the solution. I hate to say it but there are too many cars in this country. We are drowning in them. They’re getting bigger and more space hungry and it cannot be sustained. We have too many cars because the public feels entitled to have as many as they want and they can afford it. They are too affordable.
There we bump into an other inconsistency in that government see car factories as crown jewels in terms of regional employment and throw endless subsidies and soft loans at them to keep them viable, when really they should be viewed as a polluter of all things. They’re taking a hard hit because they were too efficient and producing cars faster than they could sell them. We now have the youngest fleet of vehicles anywhere in the world where seemingly just about everyone leases new cars as opposed to buying them. I still see my clunky Mondeo as newish when in reality it’s one of the oldest vehicles presently on the road.
The bottom line is that cars will necessarily have to become less affordable, which I suppose EVs will do, pricing ordinary people off the roads. If businesses want their workers to have the same mobility then we may see a return of company cars. But for that to work, we need a reliable, viable bus network servicing the whole of the country. Until that happens, people will not give up their cars.
Though this was the direction of travel, where again policy makers have failed to plan for the inevitable, storing up problems in the process, Covid has brought forth a great many of these changes, putting an end to some of our bad habits. Habits of which the single market was a facilitator. Our much vaunted £8bn sandwich industry was largely sustained by cheap labour and the daily commute. Amazon purchases delivered the next day with zero delivery costs propped up by low wage labour and cheap packing materials.
Then there’s the question of what we actually buy off Amazon, which in the main is cheap disposable tat made in China, be it electronics, fast fashion or toys. there, The Guardian reports, that nearly half of toys from third party online sellers are found to be dangerous. Much the same can be said of electronic gadgets. No doubt remainers are already spinning this as a consequence of Brexit, but this has been the case for twenty years or more. Our markets have been flooded with cheap tat that domestic producers cannot compete with.
That much of it turns out to be either substandard or dangerous rather exposes single market controls on goods as a fiction. That said, there is plenty of evidence to show that the UK is the weak link in terms of enforcement, flooding the EU with those goods, with the UK being a distribution hub for the single market. Brexit could solve that problem for the EU. But probably not. For as long as China depends on exporting cheap tat, it will find a way. There is, then that question of whether the global shipping industry is sustainable which is a whole other debate.
By the time the world has adapted to the post-Covid reality, new questions about the viability of globalisation emerge and with so much of our former existence living on borrowed time and money, it will be difficult to ascertain what is directly attributable to Brexit. What we can say is that the single market is to a very large extent responsible for the concentration of our food industry and the transformation into a low pay sector. That allowed us to spend less on food and more on other things, living large on the back of immigrant labour and cheap services. That consumerism then became the basis of our entire society as we drove back and forth (in our larger than necessary expensive cars) to retail parks and shopping centres, in a race for perpetual growth of GDP at the expense of all else.
But the party’s over. Everything we have known must change. Our habits have to change. Our spending has to change. Our lifestyles have to change. Meanwhile, businesses will have to adapt and government cannot do it for them – not least because it lacks the basic competence. I have little sympathy for those farmers claiming their produce is “rotting in the fields” when they do next to nothing to fill vacancies and do nothing to improve their offer. I have no sympathy at all for the haulage industry which treats drivers abysmally. I have even less sympathy for the borderline criminal food industry. I can gladly forego a Christmas Turkey if it puts the likes of Singh Boparan out of business.
As to meat producers, the whole industry must find a way to undo the disastrous consequences of the single market, and restore local supply chains. The EU veterinary system is bureaucratic, wasteful, useless and unsustainable and so we have an opportunity to repair the damage. That, though, cannot happen organically. In my view the government is right to let the haulage industry hang in the breeze to sort itself out but where regulated markets like meat production are concerned, the government needs to be steering and managing the change. But there we find a government that doesn’t know what is happening or why, and has no vision beyond propping up that which is failing with money we don’t have. the longer it dithers the worse it’s going to be when it crashes.
No doubt Amazon can and will adapt and nobody will mind fewer packaging materials to dispose of, and I don’t especially mind if the era of cheap disposable electronics is over. I recall how the installation of EU standards put a number of domestic electronics firms out of business as they struggled to afford the compliance costs. I recall how British firms synonymous with longevity and quality disappeared to be replaced by anonymous far eastern brands. Goods based on stolen intellectual property and unlikely to last a year. Britain sacrificed its birthright on the altar of globalisation. There is now scope to fix that. It’s not all bad.
As to our eating habits, there is actually no good reason why food should be more expensive in the long run. Farmers use immigrant labour instead of investing in agribots, and there’s no technical reason why we need to rely on Spanish greenhouses for off-season produce. Meanwhile, the meat we buy from the butchers, and the processed foods such as ham and pork pies, is not substantially more expensive than what we are buying from the supermarkets. The small- medium-sized sector can be very profitable, as it isn’t having to pay back leveraged loans to their equity sharks, pay back shareholders or make billionaires even more obscenely rich than they already are.
The trouble with corporate businesses is that there are so many layers, all with their fingers in the till (not least the CEOs with their multi-million “compensation”, that the operations are starved of funds, and corners are cut on product quality. Thus, good food doesn’t have to be expensive. It just needs less people with their fingers in the till.
Whether or not this represents the Brexit anyone voted for is neither here nor there. This is what we’re getting one way or another largely because the single market model, regardless, has reached its terminus. When I wrote about the EU’s recent reforms to the haulage sector, I made passing mention of the fact that it undermined the principles of the single market but as I wrote it I didn’t fully realise the significance. This was a change driven by Marcon, to essentially row back on freedom of movement in the haulage sector and the effective abolition of internal market cabotage.
Politics, it would seem, is asserting itself over the fundamentals of the EU project. Add to that the stresses on supply of skilled workers, and professional functionaries that keep the single market ticking, it’s not just Britain staring down the barrel of a systemic rethink. Now is the time for politics to stop trying to stifle change and embrace it with a view to shaping it. Labour wants to take us back into a the single market despite its apparent implosion, while Sunak is throwing compensatory funds at industry to prop up an ailing status quo. Unless politics can recognise that everything changing, it will have no chance of influencing the outcomes.
Though the Tories have embraced the slogan “build back better”, there is no vision behind it any more than there was “levelling up”. The so-called green revolution is yet more of the same picking of losers, throwing money at renewable energy to create make-work jobs in the marginal constituencies.
Far from diverging from the EU mentality, this is a continuation of it – attempting to buy the loyalties of voters with baubles and trinkets instead of seizing the moment. “Green jobs for notherners” is the fullest extent of their imagination, lacking the boldness to realise that if you give the nation affordable energy and low taxes, the people create the jobs and wealth. Under this dismal New Labour tribute act we are entrenching the very stagnation that brought Brexit about and standing in the way of very necessary change.