Brexit latest - what exactly is going on?
5th Sep 2019 / By Alistair Driver
Events continue to move at a bewildering pace in Westminster. Here we try and summarise what it all means.
Are we heading for a General Election?
Despite Jeremy Corbyn’s refusal to accept the Prime Minister’s offer of a General Election on October 15, it very much looks like we are heading that way.
The political process has reached an impasse. Boris Johnson has lost his majority, first with a single defection, followed by the sacking of 21 MPs on Tuesday night who defied the whip to vote with the ‘Rebel Alliance’ to seize control of the Parliamentary timetable. Even Jo Johnson, today resigned as a Minister and Tory MP in protest at his brother’s handling of the situation.
So, unable to influence events in any meaningful way, all that was left to Mr Johnson last night was to ask MPs to vote for a snap election on October 15. Under the fixed term parliament legislation, he needed a two-thirds majority – which he didn’t get after Labour abstained.
Jeremy Corbyn has been demanding an election for the best part of two years. But his refusal to pick up the gauntlet laid down by Mr Johnson so far, which has understandably been greeted with derision in some quarters, is based on a determination to ensure the Prime Minister cannot manufacture a no deal Brexit during the election process.
Labour says it will only agree to an election once legislation to effectively bar a no deal exit on October 31 is in place.
MPs will get another chance to vote for an election on Monday, although the opposition MPs have again said they will not back the call for a mid-October election. But it remains highly possible - at some point soon – that an autumn General Election will be called. Nobody will be predicting the outcome with any certainty.
Is an October 31 no deal exit still possible?
At the end of this week and into the start of this week, this was looking to be the likely outcome.
Mr Johnson had taken the controversial step of proroguing Parliament, largely seen as an attempt to reduce the time available to MPs to enact new legislation to prevent a no deal. There was little sign of any progress on a deal with the EU, including the Irish backstop. At this point, commentators were struggling to explain how a no deal could be avoided.
But things have changed dramatically this week, as the coalition of anti-no deal parties, backed by the Tory rebels, first won the vote to take control of parliament’s timetable and then set in motion the legislation intended to block a no deal Brexit, tagged the ‘surrender bill’ by Mr Johnson.
The bill requires the Government to ask the EU for a further four-month extension unless MPs agree to leaving on October 31, with or without the Withdrawal Agreement in place.
With the Government reportedly not planning to block the bill in the Lords, the MPs behind it are optimistic it will be passed by the time Parliament is suspended next week – although nothing is ever certain in this process.
But that might not be the end of the story because no deal remains the default option on October 31 unless a deal is agreed between the EU and UK. The EU would still need to agree to an extension.
Could we still leave on October 31 with a deal?
There is an EU summit planned for October 17 – but, whether there has been an election by then or not, reaching agreement in Brussels and at home and getting all the relevant legislation in place would seem an almost impossible task in the time left.
What would a no deal mean for the pig sector?
NPA senior policy advisor Ed Barker has summarised some of the key implications, including:
- Producers would face full EU tariffs on exports, making our products much harder to sell on the EU market. These would include a tariff of 45p/kg on cull sows after a 35,000 tonne quota. The cull sow market, worth £50m, would be heavily compromised, with AHDB calculating the sow tariffs would add a further 2-3p/kg to finished pig production costs. Other cuts would face tariffs, potentially creating issues with carcase balance, although processors would seek alternative markets outside the EU.
- In contrast under the Government’s proposed no deal import tariffs regime, pork tariffs, applying to EU and non-EU countries alike, would be applied at just a fraction, typically about 4-5%, of the rate applied by the EU. While this will slightly increase the cost of EU pork imports, it will significantly reduce the cost of imports from outside the EU, including from the US, where cost of production is 30-40% lower and methods of production are permitted that are outlawed in the UK and EU. Even with transport costs, US producers could significantly undercut their UK counterparts.
- Export delays at ports are likely due to the new process of approval at border inspections posts and the extra paperwork around perishable goods.
- The availability of labour has long been a concern, although this has been somewhat eased with the announcement that Home Secretary Priti Patel has backtracked on the government’s promise to end free movement immediately in the event of a no-deal. This would give three years’ breathing space before tougher new rules come in.
- The likely further depreciation of the pound would improve the competitiveness of UK pork, but could make some inputs more expensive.
- There are also questions over the availability of some key EU inputs, with, for example, 90% of veterinary medicines and 60% of CO2 coming from the EU.
What is the NPA doing to prepare for a no deal?
The NPA has been proactive in discussing the implications of a no deal with supply chain partners and members to help ensure the industry is prepared for the eventuality.
We have been actively involved in discussions with processors, marketing groups, breeding companies, vets and Defra in the past fortnight. We have also been communicating to the Government, MPs and civil servants, including directly and through the media, to emphasise how a no deal could damage the pig sector.
We will ramp up the political pressure over the next few months, working alongside the NFU.
You can view various NPA briefings on Brexit in our briefings section.