Nissan has been betrayed by Brexit ideologues

There's something tragically appropriate about the fact that the most high-profile British industrial story, as the country staggers in the direction of a no-deal Brexit, should involve Nissan.

The proximate cause of the Japanese company's reversal of its decision to build a line of SUVs at its Sunderland plant was the collapse of European demand for diesel vehicles. But as its management has made perfectly clear Britain's departure from the EU was a factor too.

It's worth recalling why Nissan is here in the UK at all. In the 1980s Margaret Thatcher practically begged the Japanese firm to establish a plant in Sunderland, promising a smorgasbord of public subsidies and support to make it happen. Such interventionism jars with the popular image of her administration as a callous band of laissez-faire ideologues obsessed with the City of London and happy to let former northern industrial powerhouses crumble.

Yet the biggest lure for the Japanese was not those subsidies, but the UK's position in the European common market. As Keith Joseph, Thatcher's industry minister, wrote in a memo to Thatcher: "Nissan had chosen the United Kingdom because it gave them access to the whole European market. If we were outside the community, it is very unlikely that Nissan would have given the United Kingdom serious consideration as a base for this substantial investment."

Another irony about the Nissan investment is that France and Germany were, in those days, hostile to the idea of allowing Japanese car firms a production bridgehead within the European common market, fearing the impact of the competition on their own domestic automotive manufacturers.

Thatcher overcame those protectionist European impulses and indeed made the creation of a free market, regulation-harmonising, "single market" among the European member states a personal priority. Yet now, 33 years on, we have nominal Tory Thatcherites not only insisting that the UK must leave Thatcher's single market but also airily dismissing the Brexit concerns of Nissan's Japanese management - a management which their heroine was once so keen to court.

The suggestion by the chair of the European Research Group faction within the Tory party, Jacob Rees-Mogg, that because Nissan's former boss Carlos Ghosn stands accused of embezzlement in Tokyo that nothing the company has to say need be taken seriously, shows how far this wing of Conservatism has drifted into denial. The ERG prefers conspiracy theories and witch hunts to listening to firms' worries about trade barriers. Before the private "letter of comfort" to Nissan from the business secretary Greg Clark in 2016 was finally published on Monday, the great fear among these hardliners was that this letter had made unacceptably positive noises about Britain remaining in a customs union with the EU.

Another lip-chewing irony over Nissan is that the Labour leader Jeremy Corbyn has been fretting recently about the restrictiveness of EU aid rules and some of his supporters have gone as far as using this as an argument in favour of total rupture. But the Clark letter revealed £ 80m of promises of UK government assistance for Nissan, with £ 61m of grants formally offered. If such state aid is forbidden under "neoliberal" EU law, as some "Lexiteers" seem to suggest, the EU's institutions and courts have been surprisingly tolerant of it.

The air is thick with accusations of "betrayal" over Brexit. But the reality is that it is Nissan and other foreign corporate investors in the UK that have been betrayed; betrayed by political extremists ignorant of history and by those who find their ideology preferable to reality.

Food for thought for Brexiteers

One could tell a surprisingly comprehensive history of the Brexit project by simply talking about food.

From curved bananas to non-recyclable teabags, Eurosceptics have long relied on myths and scurrilous half-truths about groceries to stoke public resentment over the supposed red-tape lunacy of the European Union.

More recently, Brexiteers have taken up the (mostly false) idea that the EU discriminates intensely against African smallholders in order to protect its own inefficient farmers. The pro-Brexit Tory MP Daniel Kawczynski posed sombrely in front of a tray of supermarket lemons this month in order to lambast "the EU protectionist racket".

But it's not just Africans who will benefit from Brexit. The Sun informs us that after we leave the EU the Great British shopper will all be able to save 40p on a pack of butter and 31p on a punnet of strawberries and much else besides thanks to the tariff-torching free trade deals we will inevitably sign with other countries.

Brexiteers seem to believe that a way to a Briton's support is through his or her stomach. Taking control is framed as taking control, above all else, of our grocery basket.

But it's not all one way. The Brexit food fight is a symmetrical one. US "chlorinated" chicken has become the spectre at the feast, a symbol of what the powerful US agricultural lobby will ram down our throats as the price of an inevitably unequal American trade deal. And few of the no-deal consequence warnings cut through to the public quite as effectively as the threat of a sandwich shortage.

They sometimes try to conceal it, but the agenda of some Brexiteers is plainly deregulatory. One of the reasons the forecasts produced by a small band of pro-Brexit economists show long-term gains for the UK, when every other credible study shows precisely the opposite, is that their models assume we will in future shed all our domestic product standards, including on food imports, and trade on what are known as "world prices".

But the lines between ideological fantasy and reality are becoming blurred. UK ministers insist there will be no compromising of high food standards after Brexit. They also say that in the event of a no-deal Brexit they would waive customs and standards checks on trucks delivering produce from the EU in order to mitigate transport bottlenecks and supermarket shortages. They have not said what, in those circumstances, is to stop some criminal group importing unsafe produce to the UK. Perhaps they believe it's a risk worth taking.

Regulation 1168 of the European Council, from 2011, is just the sort of Brussels red tape that Brexiteers love to hate. It lays out a host of requirements for food manufacturers, from providing detail on the geographical origin of produce to its nutritional content.

But it also says that packaging should warn buyers about ingredients that can cause a dangerous allergic reaction. Fifteen-year-old Natasha Ednan-Laerouse from Fulham died in 2016 after eating a baguette from Pret A Manger which did not list traces of sesame, to which she was allergic, on its packaging.

This was not, in fact, a requirement under the EU regulation because it was a fresh handmade product, although many people, in light of this tragedy, believe this is a regulatory loophole that urgently needs to be closed. The coroner in the case said last week that he would be writing to the government to raise concerns about "inadequate" food labelling regulation.

Brexiteers will argue that this extremely sad incident has no bearing on the issue of EU membership. And in one sense they're correct. There's no reason why the UK post-Brexit shouldn't have new domestic regulations on food labelling that are even tighter in some specific areas.

Yet this, of course, is at odds with their deregulatory impulses and the dream of importing food at world prices. Moreover, it highlights a huge and still unrecognised blind spot on trade. For it is pan-European regulatory harmonisation, regardless of whether those regulations are well-designed or not, that helps UK food exporters to tap into a significant market in the EU. It is this harmonisation that dismantles what Margaret Thatcher once called the "insidious" trade barriers of "different national standards".

Assuming that the rest of the world does not join us post-Brexit in a bonfire of food standards – and there is no reason to expect that they will – our producers will have to conform to the standards of other countries if we wish to sell into their markets. Taking back control from the EU will simply mean submitting to the authority of others jurisdictions, whether that’s the US, Canada, India or wherever. And to sell into the EU we would still have to conform to the single market’s food regulations, even if we are out of it.

Yes, there are costs from regulation. It's onerous to perform tests, to fill in paperwork, print labels and all the rest. But there are vast economic benefits too.

It was 30 years ago this month that Margaret Thatcher made her speech in Bruges, seen by eurosceptics as the lighting of the torch of national resistance to Brussels. Yet earlier in 1988 the prime minister had made another speech on the urgency of completing the single market.

"There was a tendency in Europe to talk in lofty tones of European Union," she said on the subject of regulatory harmonisation. "That may be good for the soul. But the body - Europe's firms and organisations and the people who work in them - needs something more nourishing."

 Food for thought for Brexiteers today.

This is why the Tories can’t solve the housing crisis: it would mean rolling back Thatcherism

Houses in Britain are perfectly affordable. They're bought and sold all the time.

Official figures show 114,180 changed hands in August alone. Over 2016 as a whole, 1.2 million homes were acquired.

The problem is that houses are not affordable to the people who we want to be able to buy them, mainly people under the age of 40. As we all know, average house prices have been stretching further and further away from average wages, making it ever harder to get on the housing ladder.

When the baby boomers hit 30, their home ownership rate was around 55 per cent. When people born in the 1970s reached their third decade, around 45 per cent owned their own homes. But for those born in the 1980s, the ownership rate today is just 30 per cent.

If you can't buy, you generally have to rent. Yet renting is a much more precarious reality for young people than it was in previous decades thanks to a slump in the supply of new social housing, the scrapping of rent regulation and a law change in 1988 allowing private landlords to eject tenants at two months' notice.

Renting is also more expensive than it was in the past, swallowing up 28 per cent of the incomes of those in their late 20s, up from just 13 per cent of equivalent incomes in the 1980s.

This is our housing crisis: collapsing home ownership rates for those aged below 40 and insecure and expensive renting.

The policy solutions can be loosely labelled: tax, law and supply. First, taxation reform to curb the incentive to view housing as a financial asset, something that has put considerable upward pressure on prices in recent decades. Second, greater rights and security for renters under the law. Third, planning liberalisation to facilitate a greater supply of private homes and bigger government grants for the construction of many more social ones.

This programme should, over time, bring down prices relative to average incomes and also improve life for tenants in the interim.

But the Conservatives have huge problems when it comes to delivering any of this. Significantly more social housebuilding would meet stiff resistance from the dogmatic small state caucus within the party.

Reform of the 1998 Housing Act and new regulatory curbs on rent increases would anger landlords, a category that includes more than a quarter of Conservative MPs.

Taxes on undeveloped land to spur construction rates would be fought by private house-builders, who have been major party donors. Green Belt liberalisation, to remove an obstacle to construction and reduce the price of land for develop, would scandalise the Campaign for the Protection of Rural England and the Conservative-supporting Daily Telegraph. Proper reform of property taxation, making council tax proportionate to house values, would send the wealthy homeowners of the Tory heartlands ballistic.

The Conservatives have finally woken up to the fact they need to make an offer to people under the age of 40 on housing, or see them turn to Labour in ever greater numbers. Yet to do anything serious would also alienate these key Tory support bases. "Their problem is a structural one," points out the economist Chris Dillow.

This bind is why Theresa May risibly dressed up trivial sums for more social housing last week as some kind of spending splurge. This is why we have another £10bn of taxpayers' money thrown at Help to Buy, a mortgage subsidy scheme that primarily benefits housebuilders.

Yet the Conservative Party's problem is even greater than having to upset traditional supporters: there's an emotional and ideological block.

Housing was central to Thatcherism, from Right to Buy on council homes, to stripping councils of their role in building social housing, to mortgage-interest tax relief, to lifting rent controls, to privileging landlords in the law, right up to the poll tax which abolished the progressive property rates system. It was an ideological project, to create a "property-owning democracy" and to supposedly predispose the electorate to reject "collectivist" policies.

But the failure of this project means we increasingly have the democracy without the property ownership.

And those collectivist policies brandished by Labour look increasingly appealing to the under-40s.

For the Conservatives to do what needs to be done on housing requires them now not only to take on powerful vested interests within their own party but to roll back the original Thatcher revolution on housing. It means coughing up to a series of historic mistakes.

Thatcherites hailing our exit from the single market need a history lesson

Imagine going to a funeral where it turns out that most of those present never actually knew the deceased, although they were convinced they did. The thought comes to mind listening to the obsequies for Britain's membership of the single market delivered by Theresa May yesterday.

Thatcher-worshiping Brexiteers from the Tory right are flushed with excitement at the prospect of finally "taking back control" of the British economy from meddling Brussels bureaucrats - something they are convinced leaving the single market will now permit.

Many journalists, on the other hand, highlight the single market's tariff-abolishing benefits. Meanwhile, Theresa May says Britain will retain a high level of "access" to the single market after we've left. Labour's shadow Brexit Secretary Sir Keir Starmer sternly demands it.

Yet all these reactions reflect fundamental misconceptions about what the single market actually is - and a lack of understanding of why leaving it is likely to be so harmful to the British economy.

The place to start is with some history. The single market was a significant achievement of Margaret Thatcher's government in the 1980s - something that the sponge of amnesia has apparently wiped from the minds of her former acolytes such as Iain Duncan Smith and John Redwood.

The single market was designed, with considerable influence and impetus from London, to prise open European markets to British exporters, to level the playing field for UK firms across the Continent.

"A single market without barriers - visible or invisible - giving you direct and unhindered access to the purchasing power of over 300 million of the world's wealthiest and most prosperous people," was how Thatcher herself described the single market at Lancaster House in 1988 to an audience of business leaders.

What a bitter irony that, 28 years on, Theresa May has used the same mansion in St James's as the venue to announce that Britain is walking out.

And for what? The harmonising product regulations that Brexiteers (ever since Boris Johnson first pitched up in Brussels as a bowdlerising reporter for The Daily Telegraph) ridicule and condemn as anti-democratic EU micromanagement are, in fact, designed to prevent free market-distorting discrimination by European governments.

Why is there a European directive on "jam", defining what fruits may, and may not, be used in the condiment's manufacture? To ensure that anything classified as jam can thereby be sold anywhere within the single market without the risk of some jumped-up local official - anywhere from Bucharest to Belfast - banning it from the supermarket shelves on the grounds that it doesn't conform to local labelling or health and safety rules.

The new trade department recently tweeted about Britain's "innovative jams". That EU jam directive is a designed to help those innovative jam-makers sell their wares into a market of 500 million people (it's grown since 1988) on our doorstep. Multiply that jam example by the size of our entire goods export sector to get a sense of the size of the benefits.

What about control? We submitted to the supremacy of the European Court of Justice because we needed a referee on trade and regulatory disputes within the single market. Was that a "loss of control"? In one respect, yes. But this was symmetric submission. Other nations agreed to abide by the ECJ rulings as well, preventing them from discriminating against British companies. In that sense we gained economic control on behalf of our exporters: control that we will now lose.

And tariffs? The single market was not really about tariffs - financial levies on imports. Any common or garden free trade agreement can abolish those. The single market was primarily about non-tariff barriers, such as local regulations and licensing rules that prevent, for instance, a British architect establishing an office in Milan because she or he does not have a local qualification. Or, conversely, that hinder a dentist who qualified in Slovakia operating in the UK.

"Insidious ... differing national standards, various restrictions on the provision of services, exclusion of foreign firms from public contracts," as Thatcher put it at Lancaster House.

And that is where the "access" argument made by Theresa May and Labour betrays a catastrophic muddle.

You're either a member of this single market or you're not. You have influence on the rules as a member - or you take the rules. You push for the extension and completion of the market to favour sectors you are strong in - such as services in Britain's case - or the rest of the members concentrate on their own interests in its ongoing development.

The best you can hope for short of full membership is being in the European Economic Area, like Norway.

This means you benefit from the dismantling of non-tariff barriers, but don't get to set the rules. If that sounds like a pointless deal, consider the fact that Norway values it sufficiently to pay annually into the EU budget in return. But in any case, Theresa May has now ruled even this out. The limit of her ambition, revealed yesterday, is a tariff-free trade deal with Europe.

Yet economists' consensus forecasts of long-term damage to UK trade are not based on the scenario that we fail to get a free trade deal with Europe. They are based on the scenario that we are out of the single market; that our dominant services sector will not benefit from future progress in completing it. All our experience suggests this means we will export less to Europe and import less too, which means less productivity growth for the UK economy, which means lower living standards than otherwise for us all.

"Don't it always seem to go - that you don't know what you've got till it's gone," sang Joni Mitchell in her song "Big Yellow Taxi". Perhaps we will realise what the single market is only when we've left it.

Brexiteers insist they will create a paradise of new free trade deals for Britain with the likes of America and China in the wake of Brexit which will more than compensate us for the economic damage from the loss of our membership of Thatcher's single market. But what else was it that Joni sang? That's right: "They paved paradise and put up a parking lot."

This article appeared in The Independent on 17/01/17