Brexit: it’s the economics, stupid.

The Global Future report published about a week ago, and particularly the polls it contained, received some attention, but in my view not nearly as much as they deserved. Respondents were shown four possible Brexit scenarios, together with an estimate of what each would do to the amount of money available to spend on public services. One of these options was the government’s preferred bespoke deal. All the options were overwhelming rejected, by Leave voters.

The Jack of Kent blog had a take on something similar that could also be applied to this poll result, after a well known children’s book: ‘That’s not my Brexit!’. It is very apt for this poll because it makes clear that none of the four types of Brexit offered are remotely like the Brexit people voted for. What is wrong with EEA, FTA, WTO or Bespoke in the mind of these voters? They all imply substantially less money for public services. The Brexit people voted for involved more money for public services.

This fits with the finding that most Leave voters continue to believe that they will be better off in economic terms as a result of Brexit. Many voted for Brexit because they were told more money would go to the NHS. The Remain side said that would not happen because of adverse macroeconomic consequences, but many voters believed the Leave side when they said these claims were just Project Fear. They were told that the EU would not decrease the ability of UK firms to trade with the EU because it was not in the EU's interests to do so. 

This is why polls that ask “In hindsight, do you think Britain was right or wrong to vote to leave the European Union?” only show a narrow majority for staying in the EU. In answering that question most Leave voters still believe they will be better off after Brexit. When presented with specific options that show we will not be (i.e. when presented with likely reality), you get quite different answers.

Forget those who say that the Brexit vote was all about sovereignty and not about economics. Economics matters, and the poll shows that in this case it matters a lot more than sovereignty or immigration. What Project Fear achieved, with considerable help from the media, was to take the economic factors that mattered off the table, or even replace them with mythical economic gains. [1] Voters went for what they saw as certain: £350 million a week, plus less immigration reducing pressure on public services. Both were lies, but Leave voters did not know that. Which is why most Leave voters continue to believe they will be better off, and why none of the four options they were presented with in the Global Future poll was the Brexit they voted for.

In short, half of the voting public bought snake-oil believing the claims made for it. Most continue to believe the claims, and put down the fact that the government appears not to be delivering what they were promised to something other than that they were sold a pig in a poke. If you think that is implausibly foolish, your main source of news is probably not a pro-Brexit newspaper or even the BBC.

The implications of this are huge. The Global Future poll shows that most Leave voters, and certainly most voters, do not want any Brexit deal that is actually possible. They only want the impossible deal they were promised by Brexiters. That means that any referendum on the final deal that included the government’s own realistic assessment of its economic consequences would result in a massive majority to Remain in the EU.

This is why Brexiter claims that everyone (and for the maths to work it has to be almost everyone) who voted Leave knew that meant leaving the Customs Union are beside the point, as well as being as economical with the truth as most Brexiter claims. Most Leave voters probably had only a hazy idea of what the Customs Union and Single Market were, but most clearly wanted a Brexit that delivered more money for public services. As it is now quite clear that the Brexiters cannot deliver that, then there is no mandate for Brexit. That is what these polls show.

I do not normally disagree with Martin Wolf, but I do when he says another referendum would tear the country apart. Instead, it would be the opportunity for most of those that voted Leave to realise that what they voted for is not on the table because it is not possible, and for them to gracefully retreat by changing their minds in the privacy of the voting booth. On the other hand to continue with Brexit would do far more harm to the UK’s body politic. We would have allowed politicians to put forward a fantasy and get away with it, which means every election from now on will involve claims more and more divorced from reality. The government, desperate to avoid the disappointed expectations of Leave voters, will resort to ever more populist tactics. The lurch towards an anti-pluralist democracy that we have seen since the referendum result could become entrenched in the UK.

Governments have been elected making impossible claims before, but when it turns out that they cannot deliver they can get voted out after 5 or less years. We have to think of the referendum in the same terms. We will have had two years to see if the government can produce the Brexit people voted for, and what these polls show is that they have failed to do so. That may be no surprise to many, but it is news for Leave voters. These polls show that Leave voters do not want the Brexit that is likely to be delivered. To deny people the chance of recognising that the Brexit they voted for is not possible in a referendum on the final deal is deeply undemocratic.

[1] I argue Trump did something very similar.

What Carillion tells us about public sector outsourcing

Jeremy Warner, an editor at the Telegraph, once said there are either big state people or small state people. I felt the same way following the reaction to the collapse of Carillion: there are either private good, public bad people or public good, private bad people. Of course, reality is somewhere in between.

Corillion went bust because of cost overruns or delays in three large construction projects. The nature of such projects involve that kind of risk, but clearly the company - despite its size - was not resilient enough to withstand those failures. It did not go bust because of privatisation of public services, unless you think the government should build its own hospitals or roads. If anything, it shows that those contracting out public contracts were getting a good deal.

There will always be public projects contracted out to the private sector. Much of the increase in public investment planned by Labour if it wins the next election will be undertaken by private firms. Getting the contracting relationship right is difficult and fraught with dangers.

The government clearly has questions to answer about why it continued to award contracts after the profit warning, and we need some informed analysis to determine whether the government, as they claim, had fully protected all but one (!) of these projects and will not lose any money as a result of the collapse. As David Allen Green suggests, this smacks of ministerial failure. (The link also shows public procurement can have its funny side.) Also why was the position of the “crown representative” who was meant to be overseeing scrutiny of, among others, Carillion left vacant? The government should also ask whether companies should be allowed to pay large dividends when their own pension fund is underfunded. And why Carillion's auditors, KPMG, gave it a clean bill of health when its balance sheet was already showing signs of stress

.

To see what lessons the collapse of Corillion does have for the debate over whether the public sector should privatise certain of its activities or do them in house, we need to go through some of the pros and cons

There is one main benefit of contracting out public services, which is that it can save money. To mention ‘the market’ here is not very helpful, because with one buyer and only a few sellers for something (the contract) agreed once every few years, this is hardly a normal market. [1] It is instead about the incentives faced by managers and workers, both in achieving efficiency and fostering innovation. Managers have a clearer incentive system in a private sector firm to maximise profits, and that incentive is provided by the need to bid low to win the contract and nevertheless make a profit. As Carillion shows, margins on most public sector outsourcing are not large. In that sense Carillion confirms that part of this mechanism is working. A single public sector entity cannot replicate this advantage, unless it too is in competition with private sector firms. In short, competition improves incentives.

One important qualification to this argument involves information. The temptation of a bidding system based on the lowest price is to cut quality. So the public sector has to have a clear means of not just specifying quality in the contract, but of ensuring the contract is being fulfilled once it is awarded. Sometimes politics can get in the way of that happening. For activities where quality is difficult to observe, contracting out is not a good idea.

Another qualification involves the attitude of public sector workers before privatisation. If they, for whatever reason, internalise the need for efficiency and innovation, because for example they can see how both improve the outcome for customers, then contracting out to the private sector will achieve little. The NHS could be a case in point.

A further problem with privatisation is finance. When people argue that public money should not be wasted paying the shareholders or creditors of private firms, they are both right and wrong. They are wrong in the sense that without contracting out the same amount of money has to be raised by the public sector, and so it “wastes” money by having to pay interest on government debt. But they are right in that the rate of interest on government debt is much less than the rate of interest a private firm has to pay on any debt, or in the form of dividends to shareholders. The reason for this is that investors do not like risk: people who lend to the UK government know they will always get their money back, while as the shareholders and creditors to Carillion have just found this is not true for private sector firms.

This is why PFI projects undertaken just so that the borrowing is done by the private rather than the public sector are costly from an economic point of view. It is why it makes sense to exclude public investment from any fiscal rule: fiscal rules that restrict public investment are an open invitation to politicians to undertake PFI type financing. In my view the best constraint on public investment is the expected social return, assessed with the help of an independent body. It is often said that PFI type projects ‘avoids risk to the taxpayer’. Again this is the wrong way round. It is far easier and cheaper for the public sector to take risks than the private sector, so PFI projects are paying far too high a price to avoid risk to the public sector. 

Another problem related to risk is the interrelationship between what the private company contracts to do and what actually happens when government forecasts go wrong, as they always will. This may have happened with the East Coast line “bailout” (but if it was, we should be told), and it did happen with privatising the probation service. Public sector contracting out forces each side to commit to guesses about the future, whereas if everything remains in-house there can be much more flexibility. There is also the cost of having to train more civil servants in the art of writing good contracts.

One further problem that Carillion reminds us of is that privatisation runs the risk of a degree of interruption if the company goes bankrupt. Disruption is nothing new. If privatisation is to have any benefits, the contract from the public sector has to come up for renewal every few years, and if the private sector provider is changed that will involve some dislocation of service.

One final point, which is contingent on what I hope will be a temporary state of affairs. Nowadays the management overheads for private sector firms are likely to be far higher than in the public sector, for reasons that have little to do with management quality. Ben Chu sets out how much management was being paid at Carillion compared to equivalent public sector managers. And what on earth were shareholders doing allowing the directors to relax clawback conditions on management’s pay if things went wrong, which even the Institute of Directors described as “highly inappropriate” and “lacking effective governance”. In truth the public sector is much better at stopping managers using their monopoly power to be paid over the odds than the private sector appears to be.

So the economist’s answer on public sector outsourcing is, it depends: on all the factors outlined above and probably more I have momentarily forgotten. (Like economies of scale and expertise: no one would ever suggest the public sector makes its own paperclips.) Where the balance will be is bound to be case dependent. But it would be incredibly surprising if at least some of the outsourcing undertaken by this government was not ideological rather than evidence based. This suggests that Labour, if it wins the next election, should undertake a thorough independent review when it has all the facts at its disposal. That at least might ease fears that we will lurch from one ideological position to its opposite.

[1] This is an interesting example of a longstanding debate with myself. If you want to claim that much of this kind of outsourcing represents neoliberal ideology at work (which it probably does), and also that neoliberalism is all about the market, then your definition of a market has to be pretty wide. But of course a large firm like Carillion, as Ronald Coase said, involves the large scale supersession of the price mechanism. By which he meant that firms are an alternative to markets, and large firms suppress what would be market activity if it was replaced by lots of smaller firms buying and selling to each other. This is a contradiction at the heart of neoliberalism as market worship: firms are alternatives to markets. 

Does Brexit end not with a bang but a whimper?

Most media commentary on Brexit makes a huge mistake. It focuses on what the UK government may wish to do or should do. The first stage agreement told us one thing that we should have known the moment Article 50 was triggered: the EU is calling the shots in these negotiations. [1] But the fact that the UK agreed to the text, and particularly the parts on the Irish border, has told the EU something important: the current UK government is not going to walk away with no deal, and even if it did the current parliament would almost certainly stop it.

That in turn tells the EU that it can get, to the first approximation, the agreement it wants. So what we should be asking is not what the UK’s next move will be, but what the preferred outcome for the EU is. My guess would be that their preferred outcome is a formalisation of the transition arrangements. This satisfies their three criteria: it avoids a hard Irish border, it imposes no additional trade restrictions, and the UK is clearly worse off as a result of leaving (because it has no control over the rules it must obey).

As Martin Sandbu points out, the first criteria could be satisfied by a deal that kept the UK in the Customs Union and Single Market for goods, but not for services. As the UK exports more services than it imports to/from the EU, the EU’s second criteria might still be roughly satisfied by such a deal. If the UK avoids accepting free movement as part of the deal, whether the third criteria is satisfied becomes debatable. Still it would be a possibility. Anything beyond this would mean a hard border in Ireland. It is difficult to imagine why the rest of the EU would want to seriously harm relations with Ireland by agreeing to such a thing.

Suppose something between these two alternatives, of staying in the Single Market and staying in it just for goods, does become the final deal. I think the Labour leadership could live with it if they are in government when the deal is done. Perhaps a majority of Conservative MPs could. But it means that dreams of doing trade deals with other countries would no longer be possible, and for that and other reasons a large part of the Conservative party would not be happy. The Conservative’s Europe problem would not be solved.

The fact that the Brexiters will still be agitating for a more pronounced break from Europe will be one reason why the UK will still suffer in economic terms (albeit much less than with No Deal), and this will be increased if we are no longer in the Single Market for services. Firms will always be reluctant to locate in the UK because trade might be disrupted if the Brexiters win again. Less immigration from the EU will also hurt the economy. And of course the Brexiters will remind everyone that the UK is having to accept rules on trade that it plays no part in creating.

All that suggests any deal will not be sustainable in the longer term. Norway and Switzerland may be able to tolerate being out of the club but obeying its rules because they would probably reason their impact within the club would be small, although what Ireland will achieve with the Brexit deal is a counterexample. An economy with the size and more importantly the history of the UK will find that more difficult to accept this. 

Does this mean that any deal will just be the first stage of breaking away from Europe? The Brexiters will agitate for this, but I doubt it will happen. The Brexit is essentially a project of the old. It seems far more likely to me that as time passes a majority for rejoining will emerge, and Brexit will come to an end. This mad period of UK politics, and all the political and economic harm it has done, will be a complete dead end, a colossal and damaging waste of time. 

This is my best guess at how Brexit will end, although I take no pleasure in that. [2] Not with the bang of a second referendum or a parliamentary vote, but slowly over time. The vote that rules them all today will gradually be seen not as the liberation and empowerment that so many now believe, but instead as just the machinations of a small number of hollow men. Hollow men who dream of empire renewed, and as a result are casting their country from the world stage. Hollow men who dream of personal power, and who instead turn out to be powerless. Their day will soon pass, as wind in dry grass.

[1] Here I think informed analysis, from commentators like David Allen Green for example, got it right. As I wrote: "Anyone who actually wants a good deal from the EU when we leave should realise that the UK’s negotiating position becomes instantly weaker once Article 50 is triggered."

[2] The Brexiters will not let the government propose a second referendum. A majority of MPs will not vote for one unless public opinion becomes much more anti-Brexit. Without something like a major recession, which looks unlikely, I fear a shift in public opinion will not happen in time for 2019. The post-Brexit Remain campaign has not ‘broken through’ because the tabloid press, and broadcasters following the wishes of politicians, will see Brexit through to completion because they made Brexit possible.

Would things be different if Labour campaigned for a second referendum? In terms of public opinion, that would make a difference to how broadcasters treated the issue. But Corbyn will only consider that if he could be sure that enough Conservative would back him, and by making the issue party political he cannot be sure of that. It is the fact that too few Conservative MPs are prepared to stand up against their leadership, and the 'will of the people', that makes leaving inevitable.      

Why is the UK making such a mess of A50 negotiations?

The obvious answer to this question is that the negotiator, the UK government, is completely split on what it wants. But that is only part of an explanation for this shambles. In the first year I think actions were dictated by a completely unreal perception about power, and perhaps more recently by a need to avoid a coup by the hardline Brexiteers.

The people who might have thought about the negotiations before the vote itself, the Leave side, didn’t do so partly because they didn’t expect to win. But they also had completely unrealistic expectations of the relative power of each side. This was an advantage during the campaign, because they could say ridiculous things about the economic consequences of Brexit without knowing it was a lie. But once they had won, there were only two ways to go, and either of them led to an early implementation of Article 50.

The first possibility is that after the campaign they continued to believe that German car makers would pressure the German government and the EU to give us what we want, so why not bring that on by triggering A50. The second was that they began to doubt this, but that in turn led to a fear that once the people found out they had been told falsehoods about leaving they would change their minds. That too lead to an urgent need to trigger A50 before this happened.

But Leavers did not have a majority in parliament. Remain MPs must surely have realised that the EU had much more power than the UK (the proportionate cost of no deal is much greater for the UK), and that once A50 was triggered the clock was ticking for the UK, not the EU. David Allen Green has justifiably said I told you so, and I knew when I wrote a post entitled “The Folly of triggering Article 50” in November 2016 that I was just repeating expert opinion, and to be honest common sense. As I said there

“this has absolutely nothing to do with whether you voted to Remain or Leave. Anyone who actually wants a good deal from the EU when we leave should realise that the UK’s negotiating position becomes instantly weaker once Article 50 is triggered.”

The worst explanation for why the majority of MPs ignored this advice was that they didn’t hear it. (We know the Prime Minister did hear that advice from Sir Ivan Rogers.) Almost as bad was that they heard it but thought it was just a desperate ploy by experts to delay leaving. Those who want to say it is all because of mixed motives from the Labour leadership will do so. But I suspect there is a simpler explanation: MPs felt voting to delay was ‘politically impossible’.

Part of the reason it was ‘politically impossible’ is that the standard of reporting and debate among broadcasters on these issues is so poor that the argument that triggering A50 was bad tactics would simply not have got a proper hearing. In addition the tabloids would have screamed “enemies of the people” just as they did when three judges allowed MPs a vote. In this sense our media not only gave us a Leave vote, they forced an early triggering of A50 which was not in the country’s interests.

As I wrote in that earlier post, it “would only be a slight exaggeration to say [triggering A50] allows the EU to dictate terms” which is exactly what they are doing. In these circumstances, the best approach to the negotiations is to treat them as a cooperative exercise rather than a zero sum game. Yet we were led by Theresa May and David Davis, who were instead determined to treat this as a classical zero sum negotiation where, because you had more power, your best hope was to make the other side believe you will walk away. Yet that walking away threat was never credible, partly because of reasons already given, but more importantly because a deal on the EU's terms was better than no deal.

But despite this, in our negotiators minds the delusion that we have power in these negotiations as long as we threaten to walk away seems to persist. The lack of flexibility by the EU can be dismissed as them playing hardball. As firms move abroad because they need to plan and they cannot be certain of any transition arrangements, the cost of delusion will be paid for in lost UK output and lower incomes.

It is just possible that both May and Davis have begun to realise this, but the delusion of power has been replaced by something else, which is the fear of a coup by Brexiteers. The pro-Brexit views of Tory party members makes such a threat credible, but any coup would have to happen well before the negotiations ended. Perhaps the reason May is now being so slow to move is to make the possibility of a coup less likely. But perhaps that involves a level of strategic thinking the Prime Minister is not capable of and Davis has simply given up.

Whatever the motivation, the end result has one certain consequence: the economy is damaged. As one final example, take the length of the transition period. The logical thing to do is to have a transition period until a new trade agreement is agreed. Anything else involves significant economic and administrative costs. But the UK government does not seek this because it pretends a trade agreement can be done quickly, and it pretends this nonsense to avoid a confrontation with the hardliners.

Even if this turns out to be pretend and extend, because the transition period will keep on being rolled forward at the last minute, this arrangement suits the EU and damages the UK. It is good for the EU because their exports to the UK do not suffer. It damages the UK because the uncertainty continues to make moving production to the EU rather than exporting to the EU attractive. Just one more way that the fantasies of Brexit hardliners are costing us all.

Brexit and Democracy

A constant refrain from politicians and others is that we have to leave the EU because we have to respect democracy, where by democracy they mean that 52% voted to do so. Arguments that the vote was based on lies by the Leave side are met with dismissive remarks like both sides were the same, or what do you expect from politicians and so forth. The important thing, we are told, is to ‘respect democracy’.

In Poland the government recently passed a law which will dismiss all existing judges and allow the state to directly appoint their successors. This government was democratically elected, and the plan was in their manifesto. So why did the Polish President veto the plan, and why was the EU deeply concerned about it? Surely there was a clear mandate for this policy? Shouldn’t the President and the EU respect democracy?

The reason why the President and the EU were right is that democracy is much more than having elections or referendums every so often. Checks and balances, and the rule of law, are crucial ingredients of a well functioning democracy. But having an independent judiciary is not the only essential characteristic of democracy besides voting.

I personally think an important part of democracy is that politicians do not base campaigns on complete lies, and that knowledge, evidence, facts and expertise are respected and are easily accessible to all voters. Otherwise elections can be won by those who tell the biggest lies. If this happens and is not remedied democracy is a sham. As I noted here, lies were central to the Leave campaign (more money for the NHS, Turkey about to join the EU) and have already been shown to be untrue, while the central plank of the Remain campaign (dubbed Project Fear by Leave) has already come to pass. Polls suggest the Leave lies gained them votes. Only one side in the campaign spent a large amount of time dismissing or denigrating academic expertise (be it economists or lawyers).

In the US the Republicans control Congress and the White House, all won by democratic elections where a key part of the Republican platform was repealing Obamacare. The Republicans therefore appear to have an overwhelming democratic mandate for this repeal. So why are so many people protesting against this repeal? Isn’t it important for democracy that repeal goes ahead?

You may say that the Republicans did not say how they would repeal Obamacare, but neither did the Leave campaign say how they were going to leave the EU (or rather they said whatever people wanted to hear). You may say that Leave voters will lose their faith in the democratic system if Brexit doesn’t happen, but the same is surely true for Republican voters if Obamacare is not repealed. That is hardly a reason to do it.

But referendums are not like elections, we are told. Mandates from elections can be challenged but referendum results must be respected. But where is it written that referendum results (particularly those that are so close) can never be challenged? Where is it written that we must be bound by the words of politicians during the referendum.[1] If it turns out that the claims of one side in the referendum have been shown to be false, where is it written that the referendum result should nevertheless be cast in stone for a generation. The answer is nowhere, and for the good reasons that David Allen Green explains. All that is written is that parliament is sovereign.

People overseas, in the EU or outside, are mystified at what the UK is currently doing. The main supporter of Brexit overseas is an authoritarian regime, which should give you a clue about what is going on. There are two overwhelming reasons for challenging the referendum result: it was arrived at after a deeply flawed campaign, and we now have information that clearly shows the extent of the Leave campaign's lies. The Leave campaign abused democracy before the vote with lies, and then abused the word subsequently to stifle any dissent. When a vote is won narrowly in an election based on lies that have now been exposed, it seems to me a hallmark of a functioning democracy is that the original vote is challenged and voters have a chance to vote again.

[1] We could add whether we should be bound by an electorate chosen to keep Brexiteers happy.  

Should Labour triangulate over Brexit?

There are two schools of thought about why Labour is adopting a confusing and conflicting position over Brexit which is almost the same as the government’s line. The first is that Labour is simply confused and conflicted. The more interesting is that this is deliberate triangulation: sound slightly less enthusiastic about Brexit to keep its core anti-Brexit vote, but also not to antagonise its minority pro-Brexit vote. I do not know which view is correct, and it is possible that both are. To the extent that it is triangulation, is this the right thing for Labour to do? This question is related to a recent Guardian article where John Harris argues that although Brexit will be a disaster it has to happen.

If triangulation is how Labour justifies its own position on Brexit, the obvious question to ask is why they made so much fuss when their predecessors appeared to triangulate over austerity. Brexit, like austerity, will be extremely harmful for the economy. So what made triangulation (or appeasement, if you want to use a more pejorative word) over austerity a huge political mistake, but allows the same for Brexit acceptable?

If you take the position that political parties and politicians should always argue for what they or their members believe in, rather than adapting their positions to what is politically possible or smart, then there is indeed no difference. Those who said that Labour’s failure to campaign loudly against austerity in 2015 represented some kind of moral betrayal should, for consistency, be arguing the same over Brexit.

A more political answer would be that in the case of Brexit triangulation worked, while for austerity it did not. In 2015 the election was all about economic competence, and Labour triangulation on austerity had the effect of conceding competence given the prevailing ‘clearing up the mess’ narrative. Of course Labour did not win the 2017 election, but they achieved during the campaign a surge in popularity that is virtually unprecedented. Labour supporters who are also anti-Brexit will tell you that this was because Labour made the election about austerity (or more accurately the size of the state) rather than about Brexit. If instead Labour had campaigned against Brexit, the election would have been a rerun of the referendum (as May wanted it to be) and because of the geographical concentration of the pro-EU vote Labour would have lost badly.

Even if you buy this, however, there remains a question of whether the triangulation strategy will continue to work, and whether it could have the unfortunate side-effect of ensuring Brexit will happen when otherwise it might be stopped. To assess this question, we need to take a realistic view of how the Brexit process is likely to evolve.

We know pretty well what the final deal will look like. It will be along the lines of the deal put on the table by the EU, together with a transition period during which we stay in the customs union and Single Market (and continue to pay for that privilege). We know this because the Article 50 process gives the EU the whip hand: the No Deal outcome, which is what happens if time runs out, is so much worse for the leaving country and there is no time to negotiate a trade deal. [1] As a result, to use a term loved by Conservative politicians but which in this case happens to be true, there is no alternative deal to be done.

The only risk before the election would be that the government would walk away. The election had made that much less likely. As there has been virtually no preparation for that outcome, it would bring chaos. This chaos would ensure that Theresa May’s successor lost any subsequent election. While the Brexiteers in safe seats might be prepared to see that happen, the rest of the party would not. Faced with a split in the Conservative party, Labour could not side with the government, as it would flip its triangulation strategy and lose a lot of its core support. As a result, a No Deal Brexit would fail. [2]

What this means is that we will leave the EU in 2019, but remain in the Single Market and customs union until both sides negotiate something else. Can a final deal of this kind be stopped? Logically you might think that MPs would realise that, compared to EU membership, all this deal does is mean the UK gets no say in the rules governing the Single Market and in addition we have to pay a significant sum of money for that lack of control! It is pure lose, lose, with the only positive (from a Leavers point of view) being the possibility of avoiding Freedom of Movement at some future date.

Unfortunately logic is something not normally associated with Brexit. In reality I suspect most Conservative MPs will agree to this (for the moment) softest of soft Brexits with a sigh of relief, telling themselves that they have fulfilled the will of the people with as little damage as possible. The triangulation strategy, which is essentially designed to prevent Brexit becoming a pro/anti party political issue, suggests Labour will go along with this. The only way either of these things might not happen is if public opinion turns against Brexit over the next year.

Will opinion move by enough to at least make it possible to get a vote for a second referendum through parliament? Who knows, but there are some structural factors against it. The first is the right wing press, which after all are the people who got us into this mess. The second concerns the broadcast media. Its operating model is based on a two party system, and if neither of these parties are making the case that our current difficulties are a result of Brexit then that case will not receive the exposure it deserves.

Here we get to why many of those who oppose Brexit are angry at Labour’s position. They feel that without a major party constantly reminding the public of the problems that Brexit is creating their chance of turning public opinion is much reduced. I suspect Labour’s response, if it was honest about what it was doing, would be to say that they will not risk the next election by taking a public anti-Brexit position. It is the Conservatives who got us into this mess, and they have to make the first move to get us out. The retort that Labour are reducing the scope of what they can do in government by allowing Brexit to happen has less force if we are staying in the Single Market and customs union.

This is related to the argument made by John Harris, which is that a vote to reverse Brexit would do nothing to reverse what caused the Brexit vote in the first place. If Brexit was stopped, UKIP would be given a new lease of life, and “the myth of betrayal ... would sit at the heart of our politics”. To recast what he is saying in my own words, you cannot undo social conservatism and the effects of economic deprivation, plus a decade or more of propaganda from the press, with a single vote of parliament. It is related to the earlier argument because Labour might say that they cannot reverse these same forces by a year of campaigning against Brexit before we leave.

Unfortunately there seems to be no reason why this state of affairs should change during the transition period. The government, committed to controlling immigration, will be determined to get a deal that ends free movement. Labour, to avoid immigration becoming too much of an election issue, will continue to triangulate. The best [3] hope I can see to avoid further Brexit damage is for Labour to defeat the Conservatives at an election, and quickly realise that they are better off staying in the Single Market and encouraging free movement. Which of course gets us back to why they are triangulating in the first place.

[1] It was designed in part to discourage countries leaving the EU. As David Allen Green suggests, there was a better way to leave the EU.

[2] We have gradually seen the government inching their way towards the EU proposals. (Remarks by Boris Johnson, like those of Donald Trump, are a distraction that it is best to ignore.) They are taking their time because the UK side has almost no power in the negotiations, and it is better to gradually concede to minimise any negative reaction among Brexiteers or the public. (Part of the problem here is that because the government still maintains a public stance that is pure fantasy, and the opposition wants to stay deliberately vague, the media feel unable to be straight on these issues with the public. It also requires effort to dispel fantasy with reality.)

[3] ‘best’ as in better than any other likely outcome.