Friday 28 July 2017

Compromise better than cliff edge in Brexit negotiations by Paul Chase

Will Brexit actually happen? New Liberal Democrat leader Sir Vince Cable doesn’t think so. Speaking on the Andrew Marr show, he said: “I’m beginning to think Brexit might not actually happen.” Tony Blair weighed in, expressing the view it would be stopped – and should be stopped. Are these opinions the wishful thinking of a bunch of “remoaners” or are they on to something?

Certainly in the cabinet there is a clear split between those around chancellor Philip Hammond who want a “soft Brexit” – putting the economy and jobs first – and those who want a “hard Brexit” and believe reducing immigration trumps all other issues. The issue of immigration control is one of huge significance for our sector because of our reliance on immigrant labour – and not just in London. Consider the following statistics:

– In the managed house sector, including pubs, bars, nightclubs and casual dining, 37% of the workforce are non-British nationals

– Across hospitality and tourism as a whole, 24% of the workforce is made up of non-British nationals, with 55% of those coming from outside the EU and where immigration controls are already in force, while 45% are from other EU countries where there are no restrictions on the right to work or live in the UK

– In London, non-British nationals make up 64% of the hospitality and tourism workforce, of which 46% come from other EU countries

I think there is a growing realisation among those who voted “leave” without knowing the destination that a hard Brexit would come at huge economic cost, and without a £350m-a-week bonus for the NHS.

What might a soft Brexit look like or might we decide, having glimpsed the destination, to stay in the EU after all? I think we will leave but it will be a gradual and nuanced affair. The talk of transitional arrangements, based on the difficulty of agreeing everything by March 2019, gives a steer regarding the direction of travel.

I suspect a transitional arrangement may look something like the “Norwegian model” – an “off-the-shelf” Brexit package based on the relationship Norway has with the EU. Its main elements are we would have tariff-free access to the single market for our goods and services but not be part of EU political institutions or subject to “ever closer union” or pressured into joining the single currency. We would not be part of the common agricultural policy or the common fisheries policy so would regain control of our territorial waters. We would still pay into the EU’s budget but probably about half the current rate. We would not be part of the Customs Union and therefore free to strike our own trade deals with the rest of the world.

What’s not to like? Crucially, the price to be paid for access to the single market would be more than just financial. We would have to abide by EU trade laws and be subject to European Court of Justice (ECJ) judgements; and we would have to agree to free movement of people – subject only to a temporary break clause in the event immigration was causing an acute social or economic problem. Being rule-takers but not rule-makers would mean we’d have no influence over how free trade within the single market might develop.

The points about the ECJ’s jurisdiction and free movement of people are the real sticking points. I suspect this will be sold to us as a transitional arrangement, with the final shape of the “leave deal” to be determined further down the line.

However, deadlines have a habit of slipping and one suspects a transitional arrangement scheduled to last two years could well be extended to three or four years, at which point the politicians would hope we’d all moved on and the transitional arrangement would quietly become permanent. This is shaping up to be that most British of arrangements – a compromise that satisfies neither side. However, it might just save our sector and others from an economic and recruitment cliff edge. Either way, I think a hard Brexit is dead unless the hardliners are bent on a strategy of keeping their hostage in Downing Street while trying to provoke a breakdown in negotiations and a walk-out of British officials from the talks. I, for one, favour a compromise rather than a cliff edge.

Friday 14 July 2017

Illiberal anniversaries

We’ve just had the tenth anniversary of the ban on smoking in all enclosed public places, and much has been written about its effect on pubs. Also, in a couple of weeks’ time, the UK’s Supreme Court will consider the legality of the proposed introduction of minimum unit pricing (MUP) in Scotland. Here’s my take on both:

Firstly, as a lifelong non-smoker I personally much prefer smoke-free pubs. And if I were going to die in a ditch defending the right of individuals to make free choices, the right to set fire to a paper tube containing tobacco and inhale the smoke wouldn’t be my starting point. But it is nevertheless the case an awful lot of hypocrisy is attached to the reasons given for the smoking ban. This was never really about protecting people against second-hand smoke, and the statistical case for the ill-health effects of second-hand smoke was always pretty dubious in any event. This was about stopping people from smoking by criminalising their behaviour if they did so in certain circumstances. The alleged ill-health effects of second-hand smoke on the rest of us were never more than a fig leaf.

Has the smoking ban been bad for pubs? Most commentators agree it has. If they are correct then I am forced to conclude the ban was introduced on the basis of a false prospectus when the real reason for it was to force smokers to quit, and the impact that has had on the pub trade is regarded by anti-smokers as acceptable collateral damage. The fact the template for pursuing the smoking ban has now been replicated by those who are similarly opposed to alcohol leads me to suspect the two groups of people have much in common.

There was no decline in smoking after the smoking ban in 2007 and I would suggest the drop in smoking prevalence since 2012 is mostly attributable to vaping. The “public health” community is very divided on the issue of vaping because it finds it hard to accept a private sector solution to a public health problem – one that involves enabling people to enjoy nicotine in a safer way is preferable to simply banning something.

I think there are many reasons why pubs have closed over the past ten years – supermarket pricing, the shift towards home drinking and the growth of home entertainment, a fall in the number of young people who drink alcohol – to name but a few. Some have called for a review of the smoking ban and the reintroduction of ventilated smoking rooms in pubs. I think it would be a mistake to refight yesterday’s battles, particularly when there are plenty of battles we need to fight today. Reversing the smoking ban is a lost cause and we need to reserve our powder and shot for more immediate problems.

One such problem is the possibility of MUP being declared “legal” by the UK’s Supreme Court. The Court is due to consider this matter on 24-25 July, with a decision published probably in the autumn. I’ve written more on the subject of MUP than any other single issue, at least in part because its introduction has become such a totemic issue for the neo-temperance crackpots of so-called “public health”. I’m opposed to MUP because I believe it’s a bad policy that will penalise responsible drinkers, and will not impact on problem drinkers who are overwhelmingly located in in the moneyed middle classes, not because I think it is unlawful. If it turns out it does offend against EU competition law then as far as I’m concerned that would be very helpful.

A minimum price for a unit of alcohol was introduced in legislation passed by the Scottish Parliament in 2012. Since then it has been the subject of legal challenge by the Scotch Whisky Association and others who argue the measure acts as the equivalent of a quantitative restriction on EU trade, for example, by penalising efficient wine producers who are able to reflect their efficiencies in the price charged for their product. It would appear the European Court of Justice (ECJ), and indeed the Scottish courts accept this is the case, but argue for a “public health” exemption. The ECJ has stated it is ultimately for the domestic courts of any member state to decide whether MUP is a proportionate measure, the health benefits of which couldn’t be achieved by some other, less trade-restrictive measure, such as duty rises.

The Scottish inner Court of Sessions concluded it was a proportionate measure and it met the test set by the ECJ, and it is that decision that is now being appealed and the UK’s Supreme Court will rule on. My gut instinct is the appeal will fail and this will open the door for MUP in Scotland, where it is already law. Wales and Northern Ireland also want to introduce this measure and if they do it would be very difficult for England not to follow suit. I fear this is another anniversary we may be marking in the future, and not one that should be a cause for celebration by the trade.