Brussels deals remain intractable

The annual Sham Fight at Scarva on 13th July.
The annual Sham Fight at Scarva on 13th July.

The Conservative party rebellion over the Brexit negotiations became something of a sham fight this week. Pressure from the whips and warnings of deselection of MPs that voted against Brexit in constituencies that had backed leave delivered success for the government. Indeed the 19-vote victory meant it would have won even without DUP support, although the majority then would have been wafer thin.

This solves some problems for the government, but the negotiations with Brussels remain as intractable as ever. The issue of the Irish border is still a threat to a workable deal being secured. At Westminster there are now two ways the process can go. The first would be an assumption by the pro-Brexit camp that this vote is a charter to ride roughshod over those in parliament and beyond concerned about the economic consequences of Brexit.

The other option, and the one that looks more likely, is that we will see increasing efforts by the government to convince people Brexit can work, and that there will be a Brexit dividend both in terms of funding and a reduction in regulations.

We have already seen one attempt at claiming this dividend, in the shape of the promise of an extra £20 billion for the Health Service. The government said part of this would come from funds no longer having to be paid to Brussels, but in reality most will come from higher taxes, despite the Conservative party manifesto ruling these out. This may or may not be acceptable to taxpayers and most people saw through the efforts to spin this as a Brexit bonus. There are also implications in this for agriculture and other parts of the economy.

Ministers have suggested that to minimise tax increases the government will be looking for cuts in spending beyond core areas. With areas like health, defence, police and education protected that leaves areas like agriculture vulnerable. There is a commitment to at least start the new agricultural support arrangements with a budget similar to the CAP, but that commitment could be quickly squeezed. There is a real danger that the government will find itself trying to meet its commitment to the NHS when the tax take will be falling, because of an economic slowdown if the Brexit negotiations fail to deliver a trade deal with the EU. After Brexit there will be new global trade deals, but those will take time and in the short term the economy needs the continuity of trade with the EU-27. Far off fields may look green, but 500 million consumers on our doorstep will remain our major market.

There is however still cause to hope that a better agricultural policy will emerge for the UK. It may be tempting to look, with some envy, towards the certainties of the CAP, but as debate on its future hots up the fundamental disagreements are becoming more evident. These reflect a north/south and east/west split, and deep divisions between the paymaster countries and others. Despite early general agreement, this round of CAP reform will be as bruising as any that have gone before, made all the worse this time by limitations on the budget.

The government needs to commit now to policies that will underpin a farming industry capable of delivering for farmers, the countryside and the economy. The advantages of starting with a clean sheet to create a new support policy for a single country are flexibility, the ability to devolve decision making and the fact that unlike with the CAP there is no history to be taken account of in decisions.

What is really needed now is an a la carte mix of options farmers could select from to deliver public goods. These could be tailored to regional conditions, so that we do not end up swapping centralised Brussels control for equally remote control by London. The industry needs long term income security and a real vision of how Brexit could be the foundation of a radical and better agricultural support structure. That is however only one part of the equation. We need to see support more devolved than the CAP ever was. We also need assurances that we will be able to trade with the EU-27 on the same basis as now, whether through a customs union or a unique deal. If those are in place there really is the possibility of a cost effective Brexit dividend for agriculture.