By Christopher Howarth.

Three years after the UK left the EU and two years after exiting the Single Market, there is already a surprisingly long list of achievements including regaining legislative autonomy, ending annual payments for access to the Single Market and avoiding the ‘ever closer union’ of EU foreign and tax policy.

The former Conservative candidate and special adviser in the Home Office explains how the UK Government has taken advantage of the opportunities that Brexit has so far afforded in the following ways:

Choosing our own policies & making our own laws

  1. Covid vaccines

The UK set up its own Covid 19 task force to procure vaccines and did not join the EU’s vaccine procurement strategy.

The UK’s roll out was faster than the EU’s. The UK provided a first vaccination to more than 40% of its population, whereas the EU was stuck around 12-14% in March 2021. The UK also funded the development of the Oxford, AstraZeneca vaccine, which was passed for use in the UK’s medical agency before it was passed in the EU. As a cheap vaccine requiring no refrigeration, this vaccine then became used in more countries than any other vaccine.

The first person in the world to receive a fully-tested and approved Covid-19 vaccine on the NHS was Maggie. Photo permission NHS England

While it may have been legally possible for the UK to have developed its own response to covid vaccination within the EU, all 27 Member States, agreed to allow the EU to concluded Advance Purchase Agreements (APAs) on their behalf. In the EU it is highly likely the UK would also have joined the EU scheme.

2. Freeports

The UK is now setting up eight free ports in England and two ‘green ports’ in Scotland to boost growth. Free Ports were championed by PM Rishi Sunak MP in 2016 as a backbencher in a CPS report ‘the Freeports opportunity’.

“Freeports have the potential to place rocket boosters under communities with their huge power in driving, harnessing and delivering tangible growth” – Boris Johnson. Picture by Andrew Parsons / No 10 Downing Street

While Free Ports do exist in the EU, the freedom from EU law, including on EU state aid (anti subsidy law), give the UK more flexibility to allow tax exemptions. UK free ports will benefit from reductions in Business Rates, Stamp Duty Land Tax (SDLT), Employer National Insurance Contributions (NICs), Enhanced Structures and Building Allowance and Enhanced Capital Allowances.

In addition, the ability to go further in other areas such as import duty deferral while the goods remain on site, and ‘duty inversion’ if the finished goods exiting the Freeport attract a lower tariff than their component parts.

3. Promoting innovation: A ‘Common Law’ approach to better regulation.

Much of the restrictive nature of today’s regulatory environment is due to the influence of the EU’s approach to regulation. The UK’s traditional uncodified systems of common law and Scots law was exchanged during our period of EU membership for a more ‘Napoleonic’, code-based, civil law approach.

The EU’s code-based system applies prescriptive statutory rules. It seeks to accommodate the views of an array of national legislators resulting in complication and statutory inflexibility stifling innovation and constraining business. On top of this the European Court of Justice imposing a ‘purposive’ method of interpretation seeks to apply detailed political purposes across a swath of provisions. The statutory and inflexible model is difficult and time consuming to change.

English common law and Scots law systems (now reappearing in the Financial Services and Markets Bill (Committee Stage in the Lords)) would allow regulators to apply simpler rules. Parliament would set the parameters, including, for example, the requirement to test regulations against their economic impact, the safety of a product or its energy efficiency rather than set prescriptive rules for its design. This will be inherently more flexible, reduce the amount of regulation while not reducing the aims of the regulation.

4. The REUL Bill
The Government is legislating to end the separate category of ‘retained EU law’, given special protection from repeal. The passing of this legislation will allow the Government to tailor thousands of UK regulations to the UK’s economy free of the need to pass separate Acts of Parliament.

5. The ‘Edinburgh reforms’ – freeing up £100bn for investment.
The Government has freed up capital for investment in the UK economy by changing over restrictive EU solvency rules (Solvency II). This is expected to unlock over £100 billion of private funds (currently held in restricted investment categories) for investment in productive assets such as UK infrastructure.

The changes diverging from EU law include to the ‘risk margin’, a capital buffer that insurance companies must hold. This will be cut by 65% for life insurers and 30% for general insurers. The eligibility of assets that life insurers can use to match their liabilities will also be broadened.

The reforms are also designed to improve the competitiveness of the UK’s important financial services industry.

6. The Genetic Technology (Precision Breeding) Bill

The Genetic Technology (Precision Breeding) Bill (currently at report stage in the Lords) would not be possible within the EU and promises to make the UK a centre for ground-breaking research. Gideon Henderson, Defra’s chief scientific adviser has said of the Bill:

“The ability to use gene editing to make precise, targeted changes to the genetic code of organisms, in a way that can mimic traditional breeding, enables development of new crop varieties that are more resistant to pests, healthier to eat, and more resilient to drought and heat as climate changes.”

7. World class biotech regulatory system attracting investment

Building on its success developing covid vaccines the FT reports that German Covid-19 vaccine maker BioNTech will open a research and development centre with 75 staff in Cambridge and will enrol up to 10,000 patients in UK clinical trials for cancer treatments.

“Özlem Türeci, BioNTech’s co-founder and chief medical officer, said the UK was an “obvious” choice for the clinical trials because of its “exceptionally agile” regulator, the NHS’s ability to recruit participants and its expertise in genomics.”

8. Animal welfare improvements
The Animal Welfare (Kept Animals) Bill (report stage in the Commons) will largely bring to an end the live export of animals for slaughter, and will also introduce tougher measures to crack down on the smuggling of dogs and puppies into the UK. These were both Conservative manifesto commitments only possible to deliver due to Brexit.

9. Cheaper motor insurance – reversing the Vnuk ECJ Insurance case –
The UK has reversed the 2014 Vnuk ECJ case that held that compulsory insurance should be extended to cover vehicles moving on private land while also extending the categories of vehicles (lawnmowers etc) that need insurance. Reversing the case was done via the Motor Vehicles (Compulsory Insurance) Bill and is estimated to save policy holders £458 million a year.

10. Amending HGV drivers’ regulations to safeguard critical supply chains to ensure critical supply chains were maintained” throughout the disruption caused by Covid on 22 January 2021 the Government temporarily relaxed the enforcement of retained EU law setting driving time limits and rest patterns of heavy goods vehicle drivers. This would not have been possible in the EU. The temporary exemption was extended a further three times until the supply issues subsided.

Photographer: Cpl Robert Weideman. UK MOD © Crown copyright

11. Airports Slot Allocation – removing ‘ghost flights’ during covid.

Under EU law airlines must continue to fly their routes or lose their ‘airport slot allocation.’ During the slump in aviation caused by covid airlines were forced to fly ‘ghost flights’ (with no passengers) to keep their entitlement to landing slots. The UK, outside of the EU, used its powers to vary these rules temporarily in order to prevent ‘ghost flights’ and thus save emissions and money for the airlines.

Our own borders

12. Immigration controls
We have left the EU’s free movement immigration zone and have used our new control to introduce a points based system prioritising skills and reducing the amount of low skilled immigration (previously often from the EU). While overall immigration has gone up, there is evidence that UK workers previously suffering wage depression in less skilled work have benefited from the resulting tighter labour market.

Our own money

13. No annual EU budget payments

As a member state the UK made an annual payment into the EU’s budget to pay for an expensive agricultural support policy, a regional policy and other EU priorities. The EU’s Common Agricultural Policy and Regional policies were bureaucratic, designed around other EU states priorities – who were their major beneficiaries. In 2020 the UK made a net public sector contribution to the EU of £12.6 bn (£17.bn gross). This would have continued and risen every year.

14. No liability for the EU’s current recovery plan saving £10s billions

The EU states have agreed a €806.9 bn short term fund they have billed “The largest stimulus package ever” In addition they claim:

“The EU’s long-term budget, coupled with NextGenerationEU (NGEU), the temporary instrument designed to boost the recovery, form the largest stimulus package ever financed in Europe. A total of €2.018 trillion in current prices”

The UK as a former net payee into the budget would have had to commit tens of billions to this program and received back less than it put in.

15. Tax reform – VAT on tampons & energy saving products
While an EU member the EU controlled UK alcohol duty and VAT rates, setting minimum levels and rules. The UK has now moved to lower VAT on sanitary products and reduced VAT on energy saving products, something proposed by UK Chancellors for decades but blocked by EU law.

The UK is also making three changes to rules on how wine and alcoholic drinks can be described and marketed on labels. One example is that cider will now be taxed at a lower rate. This also helped the UK sign a new trade agreement with New Zealand.

Our own resources

16. Taking back control of UK Fishing
We have left the Common Fisheries Policy and have increased the amount of catch available to UK fishermen.

Brixham, Devon

Under the Trade and Cooperation Agreement a five-and-a-half-year adjustment period was agreed. The quota of fish EU vessels can catch in UK waters will reduce during that period by 15% in the first year and then 2.5% for the following four years. UK fishermen will regain 25% of the current EU catch in British waters within five years. We will be free to increase the amount available again in 2026 when the current agreement ends.

The catch levels agreed for North Sea stocks for 2023 (compared to 2022) have increased as follows: Cod +63%, Haddock +30%, Herring -7.3%, Plaice +5.8%, Saithe +18.7%, Whiting +30%.

17. Bans on environmentally damaging fishing practices.

EU vessels have been banned from carrying out electric pulse fishing in UK waters. Pulse trawling uses electrical signals to drive flat fish from the seabed into nets. Using an electric current was banned by the EU in 1998 but pulse beam trawling continued under an EU derogation. 80 Dutch vessels had permissions to use this method in certain parts of the southern North Sea.

The UK’s Marine Management Organisation has recently proposed bylaws to ban ‘bottom trawling’, (weighted nets being dragged over the seabed), from the Dogger Bank special conservation area, and three other English marine protected areas.

18. New agriculture support scheme – no more CAP
Under the Agriculture Act 2020 the UK will depart from the EU’s CAP and administration and introduce a UK scheme accountable to the UK Parliament.

This will consist of:

A new Sustainable Farming Incentive scheme replacing the Basic Payment Scheme

A Local Nature Recovery scheme as a successor to the Countryside Stewardship scheme. It will pay for locally-targeted actions to make space for nature alongside food production.

Landscape Recovery will focus on large-scale, long-term, significant habitat restoration and land use change.

The EU’s Rural Payments Scheme under the Common Agricultural Policy was notoriously complex for farmers to apply for and prone to delays. In 2015 Defra complained the changes to CAP initiated at the EU level had made the programme the “most complex ever”.

Our own role in the world

19. Free Trade Agreements
We now have new trade agreements with Australia, New Zealand and others that we did not have as EU members and have tailored other deals to our own economic needs. We can now join the transpacific partnership if we chose to. In total over 70 UK free trade agreements have been signed since Brexit.

Free from the EU’s Customs Union the UK has also used its powers to unilaterally reduce the import tariffs on 100 goods for two years including those up to 18% on things such as aluminium frames used by UK bicycle manufacturers to ingredients used by UK food producers.

20. EU foreign policy – Ukraine
We were the first to send arms to defend Ukraine ignoring German bans on overflight and other political pressure. While the UK could have helped Ukraine as an EU member state the freedom outside of the EU’s unwritten rules on solidarity in foreign policy (and drive towards ever closer union), the horse-trading and consensual method of EU decision making made this much easier and faster.

“Using the world-class expertise of the British Army we will help Ukraine to rebuild its forces and scale-up its resistance as they defend their country’s sovereignty and their right to choose their own future” – Defence Secretary Ben Wallace. Photographer: PO Phot Dave Jenkins -UK MOD © Crown copyright 2022

21. AUKUS
Likewise, we have signed a nuclear submarine deal with Australia (negotiated concurrently with a UK/AUS free trade agreement) in opposition to France, that will provide jobs in the UK and greater security for our closest Commonwealth allies. It is possible that as an EU member we would have been put off by the need to mollify French and German interests and guard UK interests on unrelated EU policy areas.

Then Prime Minister Boris Johnson joined US President Joe Biden and the Australian Prime Minister Scott Morrison from No9 Downing Street at the launch of the AUKUS Partnership. Picture by Andrew Parsons / No 10 Downing Street

Our own future

22. The UK has already avoided 7,391 new EU laws

The UK left the EU on 31 January 2021. Since that date a search of the EU’s legal database shows that the EU has enacted 7,391 new laws. In addition to that there are thousands more pieces of ECJ case law and EU decisions that would all have been binding.

23. Democracy
We can no longer be outvoted in the European Council, subject to Qualified Majority voting without a veto. We no longer have to listen to unrepresentative MEPs from around the EU making UK laws. We no longer have to spend diplomatic effort to protect vital UK interests from EU lawmakers, often horse-trading one interest for another.

24. An end to ‘ever closer union’ of EU foreign and tax policy.
The EU is a dynamic organisation constantly changing towards its stated goal of ‘ever closer union’. Outside of the EU we make our own laws, are no longer bound by the Eurozone and future bailouts and can chart our own future rather than one set out by the founding fathers of the then EEC.

France and Germany recently celebrated the 60th anniversary of their Élysée Treaty (22 Jan 2023) to argue: “we need to widen the fields where qualified majority voting applies in the Council to overcome the deadlocks that have been observed, such as on certain areas of Common Foreign and Security Policy and taxation”  i.e. the removal of the veto from some of the few remaining areas of national competence.

More in the pipeline:

While in the future the distinction between Brexit policies and everyday governance will disappear there are a number of Brexit opportunities and policies that still need to be achieved:

  • The Northern Ireland Protocol, to allow Northern Ireland to access the full benefits of Brexit.
  • More adaptions of EU retained law before the sunset deadline of 2023.
  • More free trade agreements – The UK is negotiating accession to the CPTPP Trans Pacific Partnership, which would give it access to some of the world’s fastest growing economies, and in time with India & USA.
  • The “five growth industries: digital technology, life sciences, green industries, financial services and advanced manufacturing” set out in the Autumn 2022 Budget statement. The UK’s Chief Scientific Adviser, Sir Patrick Vallance, “is currently reviewing how the UK can better regulate emerging technologies in high growth sectors”.
  • Restoring the UK’s system of’ Common Law’ principles (rather than EU law principles) to our regulatory system.

Misleading claims about Brexit:

Claim 1: Brexit has damaged UK GDP

  • Claim from CER “the economy is now 5.5% smaller than it would have been if the UK had remained part of the EU.”

Why it is misleading:

This claim is based on comparing the UK’s actual performance since 2016 with a ‘doppelganger’ created by the CER for the prior period 2009Q1-2016Q2. The dopplegangers are weighted growth rates for a selected group of countries. The weighting for GDP is United States (31%), Germany (15%), New Zealand (14%), Norway (8%), Australia (5%) and Iceland (5%) etc. These comparisons are different to ones they used by their earlier studies. These comparator countries are not those which individually had a growth performance similar to the UK. Instead, the doppleganger indices are statistical artifacts which combine disparate countries in a complex way to match the UK over a short period. The studies, then wrongly assume that these indices provide a reliable benchmark of what would have happened in the UK after the Brexit referendum. The flaws in this approach can be seen in that countries like Germany and Japan perform equally as badly as the UK when compared to the same doppleganger benchmark. Even Greece is included in the GDP doppleganger even though the Greek economy was declining between 2009-16 while the UK was growing.

The doppleganger comparison to the UK is calibrated over the short period 2009-2016 which was one of cyclical economic recovery in the UK from the deep banking crisis recession of 2008/9 and thus comparatively fast growing. Attempting to match other countries with the UK over this period with that after 2016 will naturally select faster growing economies. The doppleganger studies essentially assume that a cyclical upturn in the UK would have lasted indefinitely in the absence of Brexit. The technique identifies a large negative impact for Brexit even before the UK left the Single Market in 2021. The technique makes little sense and the technique should be dropped.

  • Claim from Mark Carney: “in 2016 the British economy was 90% the size of Germany’s. Now it is less than 70%’.”
  • This claim is based on the following widely reported interview the former Bank of England Governor made with the FT claiming the UK had lagged behind Germany since the referendum.

Why it is misleading:

  • It measures the size of the two economies in current prices including inflation, and not in the conventional constant prices.
  • Even on its own terms the statistic is incorrect. ONS data on nominal GDP estimate that the UK economy has “shrunk” from about 87 per cent the size of Germany’s before the EU referendum to about 76 per cent now. Carney incorrectly mixed the use of ‘real’ GFP and ‘nominal’ GDP incorrectly ignoring inflation.

It chooses the referendum date not the date of EU or Single Market exit.

Carney ignores the effects of Foreign Exchange movements. Sterling had risen sharply before 2016 and has decreased since, giving a misleading comparison with his selected economy.

The use of constant price data based on Purchasing Power Parity (PPP) exchange rates, which strip out the effect of foreign exchange. gives a different picture. The actual comparison of Germany and the UK growth is set out below:

  • Leading the left-wing and pro-remain economist Jonathan Portes, professor of economics and public policy at King’s College London, to described it as a “zombie statistic” and “nonsense”.

Claim 2: Brexit has damaged the Union

  • Scotland: It was claimed by William Hague Alex Massie and others that a vote for Brexit would increase the possibility of Scottish independence, with many Scots being persuaded to vote to stay in the EU to help preserve the Union. Scotland voted 62 per cent to remain. Since 2016 nationalist politician have argued that Scotland joining the EU is a reason to leave the UK.

Why these claims were (and are) misleading:

  • There is no polling evidence that the EU referendum has affected Scottish views on independence.
  • With the UK outside the EU and the Single Market, advocates of Scottish independence have to contend with the issue of the Scotland / UK border. There are no easy solutions for them. While the UK was a member of the EU nationalists could argue that ‘independence within the EU’ would allow independence without a border with the rest of the UK and so be independent in the manner of other smaller EU states.
  • It remains unclear whether Scotland could even join the EU on UK exit and what terms they would have to accept. They would have to fulfil the Copenhagen criteria and answer questions as to their currency and fishing resources.
  • The 2016 referendum was a national UK referendum and unionist Scots (like those in England) could vote to remain in the EU yet also chose to accept the result and not seek independence.
  • Northern Ireland. Northern Ireland voted to remain in the EU yet despite the problems caused by the Northern Ireland Protocol support for a ‘United Ireland’ remains static and influenced by other factors.

Claim 3: Brexit has reduced UK trade (with thinks to Lord Lilley for input)

  • The Office for Budget Responsibility: Brexit “will result in the U.K.’s trade intensity being 15 per cent lower in the long run than if the U.K. had remained in the EU.” 

Why this claim is (and was) misleading:

  • UK exports to the EU have recovered from a downturn during covid in line with exports to the Rest of the World.
  • The OBR claim was not based on its own research but is based instead on studies by other organisations.  It cites two studies claiming they “provide evidence that Brexit has had a significant adverse impact on UK trade … via reducing overall trade volumes …
  • The first of these studies actually reaches the opposite conclusion: “We estimate that the new TCA trade relationship led to a sudden and persistent 25% fall in relative UK imports from the EU. In contrast, we find a smaller and only temporary decline in relative UK exports to the EU.  So, the UK balance of trade with the EU improved during the first year outside the Single Market.
  • The second study confirmed that the first study was correct to conclude that UK exports to the EU have not declined relative to UK exports to the Rest of the World.  So, it decides that this must be the wrong comparator.  Instead, it compares recovery in UK exports to the EU with recovery of EU exports to the Rest of the World.  This is frankly bizarre.  No-one suggested ex-ante that this comparator should be used.  There is no cogent justification for using it – other than it gives the answer the Irish researchers clearly wanted.  

Actual UK exports and imports to the EU and rest of the World (diagrams below):

The following graph show that contrary to the OBR forecasts that UK exports to the EU and the rest of the world have increased over all and largely in line with each other.

  • Given the new trade agreements outside of the EU and our departure from the Customs Union, (allowing the lowering of tariffs on UK imports from states such as Australia & New Zealand) it would not be surprising if UK trade, free from the trade diversion inherent in a Customs Union, grew faster with the rest of the world as it readjusted to a new trading environment.

Christopher Howarth is a former Conservative candidate and special adviser in the Home Office. Follow Christopher on Twitter here.

This article was first published here. Original article includes references and sources.

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