You can see why Theresa May locked her Chancellor up in a cupboard during the general election campaign. Not only was his credibility shot in his bungled Budget, where he seemed not to realise that his plan to raise National Insurance violated the manifesto upon which he was elected, but he’s now still seeking to undermine his colleagues on Brexit.
The UK position is clear: yes, we’d like a good deal with the EU but if one is not forthcoming then we’d walk away and use the default World Trade Organisation rules. Hardly a leap into the unknown; the WTO rules govern the UK trade with our largest single partner, the United States. And the guidelines have already been guaranteed. I won’t go into the details: they’re explained clearly by Michael Burrage in this Civitas pamphlet (pdf) entitled It’s Quite Okay to Walk Away.
— The Andrew Marr Show (@MarrShow) June 18, 2017
This is the “no deal is better than a bad deal” strategy. It has two functions: one is that it’s true, which is why (as James Forsyth revealed in his Sun column) Cabinet members have been asked to prepare for no deal. Doing so will make a lot of them realise that the WTO safety net is comprehensive and that Britain, as the world’s sixth-largest economy, is big enough to handle its own trade arrangements. That the “cliff edge” doesn’t exist.
But the other function is to make clear to the EU that we are negotiating, rather than begging. David Cameron’s great error was that everyone knew he’d sign any old renegotiation, in spite of pretending that he might not. So the EU (fatally, for UK membership) refused to give a deal worth the name. Cameron failed in these talks, costing him his job and his reputation, because he didn’t remember a basic rule of talks: you need to be prepared to walk away. Whether you’re trying to negotiate a work contract or haggle with a mushroom seller, you need to be prepared to walk away. If you can’t say “no deal is better than a bad deal” then you’ll get a bad deal.
So the British position needs to be clear: while our first preference is a deal, we are happy with walking away. The WTO rules will cover us. If we can credibly make this argument this makes a good deal far more likely: the EU needs a free trade deal with the UK more than we need one with them seeing as we buy more of their stuff than they buy ours. The credible threat of the UK walking away and using WTO rules was the strongest card we had to play.
Which is why it’s alarming to see Hammond scrunching up that card, using the kind of doom-laden Remain language he deployed so unsuccessfully during the campaign. When Andrew Marr asked him about his government’s agreed position, that “no deal’s better than a bad deal” he replied: “Let me clear, that no deal would be a very, very bad outcome for Britain.” He cited no evidence whatsoever for this claim then added a caveat that a deal intended to punish Britain would be even worse. But in saying that no deal would be “very, very bad” undermined his colleagues who are about to go out to start to negotiate on the basis that no deal would be fine.
Either Hammond doesn’t realise how such language weakens the UK negotiating stance – or he does realise, and doesn’t care. Neither is acceptable for a Cabinet member of his seniority. We’ll have enough people trying to destabilise the UK position without Hammond trying to go solo. What does he have to gain? Weakening his colleagues won’t make Brexit any less likely to happen. Perhaps it’s petulance or perhaps now, as with his Budget, he didn’t think things through properly. Or perhaps now that there’s no Fiona Hill to chew his ear off, and the PM has lost her authority, he’s rocking the boat because he can. Because there’s no one to stop him.
With Brexit talks about to start, someone ought to explain to the Chancellor how discipline of message is crucial – and will be until the talks conclude. But with Theresa May’s authority vanished, it’s not clear who that person would be.
Update: Hammond claims he was restating the government position, which (worse) he probably believes. Just as he didn’t twig that the 2015 manifesto he stood on ruled out national insurance tax rises, he seems to struggle working out that the government’s position is that they are not afraid of walking away. And that no one outside the Labour Party has described the no-deal/WTO outcome as “very, very bad outcome”. What a shambles. Who is clarifying the message for the benefit of those government members who need it spelt out? Come back Fiona Hill, all is forgiven…