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This week, NFDA attended the annual Labour Party Conference. Two events in particular provided interesting insights into what the future of the UK could look like after Brexit. Chuka Umunna MP and Chris Leslie MP, along with other top speakers, addressed the post-referendum situation, possible trade deals with the EU, the apprenticeship levy, as well as risks and answers to the UK’s skills shortages.
“Where next for Britain in Europe?”
Initial thoughts on Brexit…
Tom Kibasi opened the discussions, he recommended that leaving the customs union was the best start as it would enable the UK to have control of its deals. A lot of the argument was centred on the fact that the UK is too big an economy to be a ‘rule taker’.
Prof Anand Menon stated that despite whatever our Government wants, the only choice is to have a hard Brexit because of the reasons people wanted to leave the EU and the UK not wanting to be subjected to rules. He added that he does not understand what the phrase “access to the single market” means: the UK is either in the single market or it is not.
Chuka Ummuna MP, stated that the legislative effect of Brexit was enormous and there was a lot of legislation to be heavily repealed or amended. In particular, employment law. Overall, he said that the UK must be ambitious and should absolutely aim for free market access with amendments in current immigration policy. He believes the UK does have the weight to achieve this and that the fact the UK actually voted for Brexit makes this possible, proving to the heads of the EU that people are unhappy with the current structure and rules.
Menon stated that Article 50, in reality, will probably create a temporary agreement and that the future is when we will really start to make and see the negotiations. He stated that companies like JLR will be creating more and more smart cars in the future with Brussels making the rules. Therefore, the UK needs to be in the room. He also clarified that manufacturers can take on the 10% tariffs. He stated this was not preferable but could be managed and are likely to be included in prices. Something NFDA has to consider.
Liberal Democrats proposal
The panel also discussed the Liberal Democrats policy of a second referendum.
Chuka Umunna, who Chairs the Vote Leave Watch, stated that he would only support a second referendum if the package was “substantially different to what people expected”. He also emphasised that Leave politicians must be held accountable because there is going to be a lot of angry people who voted Leave on the basis of false information. Kisabi added that there is a danger that the promises made but not met from Leave MPs could further corrode trust in the system.
Labour not discussing Brexit
It has been notable that Labour did not discuss Brexit during any of its official conference speeches. All pannelists agreed that this was wrong, especially from the official opposition. Chuka Umunna MP, in particular, stated that it was a “disgrace” that Labour was not debating Brexit and detailing its policy.
“Going for Growth – Driving Prosperity in a Post-Brexit World”
Interestingly, positions held by MPs Chuka Umunna and Chris Leslie were very similar, although neither said their views were the official party line.
Fairburn detailed the CBI’s three main priorities since the referendum:
The speakers were also asked a series of questions from the audience:
Question: what has caused the productivity gap to widen?
Leslie asserted that we are entering a period where Brexit discussions have taken over from the ‘Economic Crisis’. Brexit is now a “big cloud hanging over our economy”. He does not think that there should be a second referendum and emphasised that businesses cannot cope with the current “limbo” situation for 5 years.
In line with Chuka Umunna’s thoughts, Leslie stated that the German/French elections will probably “bash Britain” and we should wait until these are over before entering into negotiations. He also added that it was “terrible” that Labour was not discussing Brexit on the main conference stage.
Question: what would a good deal look like for you?
Leslie wants to retain as many of the good components of EU membership as possible. However, he states, if you stay in the Customs Union you have to take rules with no influence and this “feels very different.” He stated that the UK is a big enough economy that must have a say in the rules it abides by. What Leslie recommends is a brand new bilateral agreement with consultation.
Lucian Hudson, believes that current political and business uncertainty has to be an encouragement to act; especially in addressing skills shortages, with a focus now more than ever, on apprenticeships and adult learning. There is expected to be 13 million job vacancies in 10 years’ time and only 7 million school leavers to fill them. On the other hand, he added that there is an existing workforce which is undervalued, with a number of employees who want to learn and improve. He pointed out that there has been a 58% fall in students taking on part time study in the past five years, part-time study is well known to be essential to adult progression.
Apprenticeship Levy, Industrial Strategy and wages
Leslie stated that the Levy was used as the Government’s option of raising money for skills. However, the Government needs to communicate more with businesses.
Carolyn Fairburn stated that the Levy “is too narrow”. Businesses have a commitment to apprenticeships, but they are just not sure how it will actually work for them in practice. With regards to industrial strategy, Fairburn said that the Government needs to establish its vision for the industry, how it should look like in the next 10-15 years and then look at what it needs to do to get there.
Chris Leslie MP stated that it is now essential we have a third runway at Heathrow airport, which would give off a positive sign to the world that “we are open for business”. Fairburn agreed and added that the third runway, which she hoped would be sorted “really soon”, is not just about London but would impact cities all across the UK. Hudson also said that aviation was very important and that the UK needed to be more open than ever.
Labour, Businesses and Brexit
Chris Leslie MP asserted that Brexit is a problem because of the UK’s current political uncertainty, which is causing a fundamental break in business investment and then stumps productivity. According to Carolyn Fairburn, there are big differences in productivity levels even within the same sector.
The economist John Peak asked: “Are you being optimistic on the Brexit deal? It is unlikely we will go for a soft Brexit”.
Leslie admitted that the Government should start off with a big ask and then shift into a new bilateral agreement, adding that it is not reasonable for the UK to be a rule taker. He also reiterated that the UK had to be careful of the election cycles taking place across the continent.
Responding to the question, Fairburn stated that she was not quite as pessimistic as Peak, insisting that both sides, UK and EU reap lots of benefits from the partnership. She stated that it will be a long, painful and political process because of elections and UK issues within politics, but it was worth fighting for because the EU has been a huge part of the UK’s prosperity.