The Brexit shambles: Charting a path through the rubble

In a paper published this week by Nuffield College, Oxford Jim Gallagher argues that in responding to June’s Brexit vote the UK and Scottish governments must proceed rationally, on the basis of the evidence, and pursue the national interest. They should not feel bound by the Leave campaign’s promises and should seek to stay in, or as close as possible to, the single market. The paper is summarised here.

Credit: Scottish Government CC BY-NC 2.0

In an attempt to unite the Tory party David Cameron has split the country. He has left the governments of the UK with a shambles to clear up. It is not at all easy to see a path through the rubble, but if governments focus on the things that really matter – the economy, the territorial integrity of the UK – then perhaps they will be able to discern a way forward.

The first thing they need to do is understand the nature of the vote. Just like the vote in the Scottish referendum, it was as much a cry of distress as a political statement. Like the Leave campaign, the Leave vote is more protest than proposal. Of course, there are those in the UK who are ideologically opposed to Europe, but what got leave over the line in the referendum were the votes of the politically alienated and economically distressed. The present setup, economic or constitutional, is not working for them, and they were led to believe (by a notably mendacious campaign) that leaving the EU would solve their problems. Those who thought things couldn’t get any worse for them were not put off by George Osborne’s warnings about risk.

In that sense voters are like students – they give the answer to the question they would have liked the examiner to ask. But in this referendum, it was the question setters who failed.

Understanding the vote does not mean Theresa May can ignore it. She has to pursue Brexit. But her government doesn’t have to accept the premises on which leave conducted its campaign, nor keep its varied promises. Many of its premises were plain wrong and some of its beliefs irrational. Even its proponents now admit many of its promises were impossible. Accepting the result of the referendum doesn’t remove government’s responsibility to look at the world rationally, on the basis of the evidence, and then to pursue the national interest.

Two key aspects of the national interest must be pursued. The first is economic. The government does not have to believe the fantasy that leaving the European single market will somehow be good for the British economy. We all know – and the Treasury better than anyone – that it will be economically very damaging. So the government’s objective must be to stay in or as close as possible to in that market, even once the UK leaves the European Union. One of the Leave campaign’s beliefs was that it would be possible to do that while forbidding free movement of labour. It is certainly not clear that was well-founded.

The only practicable way to stay in the single market is to become, like Norway and Iceland, a member of the European Economic Area. It is an irresponsible fantasy to claim somehow the UK could negotiate its own new, bespoke single market deal, subject by subject with the EU in any plausible timeframe, and perhaps at all. And when it becomes clear that this deal is only available if the UK also accepts freedom of movement – like Norway and Iceland – ministers will have to accept that reality. They are not obliged to believe what the leavers believed. They cannot sacrifice the UK economy on the altar of keeping someone else’s impossible campaign promises.

The terms of exit, especially free movement of labour, matter for more than just the economy. They have serious implications for the territorial integrity of the UK. This matters most for Northern Ireland, as in the absence of freedom of movement with the Republic, the border comes back into Irish politics in a way it hasn’t since 1972, with unpredictable consequences. But if we keep free movement, we can keep the common travel area with Ireland, and an open border between North and South. David Davis seems to have spotted this reality, at least.

Similarly for Scotland, the terms of exit have constitutional implications. The central expectation is that Scotland, as part of the UK, will leave the EU when the UK does. After all, it is less than two years since Scots voted against independence. But pressure from an SNP administration in Edinburgh for independence hasn’t gone away.

Some will claim Scots voted to remain because Scotland is different from England. Even a little analysis of the vote shows this is not so. First of all, nearly 40 per cent of Scots voted to leave. In both countries, a substantial block of the electorate feel alienated and left behind. In Scotland, they added weight to the traditional nationalist vote in the independence referendum; in England, they tipped the balance for Leave. In both places they are hurting, and protesting about it. Brexit is unlikely to help them, but then independence wouldn’t have either.

Nevertheless Scottish politics is full of talk about another independence referendum. Nicola Sturgeon is quite cautious about it. That may just be because she not sure of winning: opinion polls suggest that while views have shifted a bit, it is not by very much, and certainly not into a secure and overwhelming majority for independence.

I hope the Scottish government are also looking at where Scottish national interest lies. It takes little reflection to realise it lies in retaining as many of the benefits as possible of both of the unions to which Scotland belongs – the British union and the European one. Losing the European single market would be a bad blow to Scotland, and the Scottish government are right to argue to retain it; losing the British market would be catastrophic.

The single most important priority for any Scottish government must be to avoid in any circumstances a hard border with England, a new Hadrian’s Wall along the Cheviot Hills. There is no risk of that if Scotland remains in the UK. But an independent Scotland, if it were able to secure EU membership, would be in a very difficult position if it became an offshore island of Europe, with the rest of the UK between the two, and behind a hard border. Nearly half a million Scots live in England, and nearly a quarter of a million people from England, Wales and Northern Ireland in Scotland. They want to retain freedom of movement inside the UK, and in Europe too. So pressing the UK government to go for a Norway option must be Nicola Sturgeon’s first task.

The Scottish government must also look to Scotland’s economic interest. The takeaway message from the Scottish referendum was that there was no plausible economic case for independence, and no sustainable fiscal or monetary plan. In public spending, Nicola Sturgeon must retain the very good deal just renegotiated with the rest of the UK for Scottish devolved budget, which is much higher than in England. As far as the currency is concerned, last time round the SNP wanted to retain the pound in a currency union. There is certainly no groundswell of opinion for a new Scottish currency, and little realistic prospect – as some SNP MP’s are now suggesting – of pegging a new Scots currency to the pound. (That would require unprecedented fiscal stringency to build up the necessary foreign exchange reserves. Float the Groat, anyone…)

So maybe it is right that the speculation centres on whether there is some new deal under which Scotland can retain the both the British union and the European union’s advantages. Might Scotland in some way be an associated region of the EU? Might Scots even retain EU citizenship? All of this is speculative, but one might even speculate that there could be a new constitutional settlement on which Scotland could, after years of division on the independence question, unite.

Perhaps that is a daydream, but Scotland can certainly draw one lesson from the EU vote: it’s unwise to hold a referendum unless you have a proposition which you can be certain of implementing on the terms you have promised. The UK just made that mistake. Scotland should not repeat it. One ill-informed decision should not lead to another.

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Note: Jim Gallagher’s paper offering advice to the UK and Scottish governments on how to proceed after the European referendum was published this week. It can be accessed here. This post was first published on the Constitution Unit blog and is reposted with the author’s permission. It represents the views of the author and not those of Democratic Audit or the LSE. Please read our comments policy before posting.

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Jim Gallagher is an Associate Member of Nuffield College, Oxford, and visiting Professor of Government at Glasgow University. He was Director-General, Devolution Strategy, at the Cabinet Office from 2007 to 2010. He tweets@ProfJimG.