National ConservatismEconomic Reality & Fake Sovereignty
In today's interdependent economic world, UK companies are just too small to survive and thrive without cooperation with the EU, writes Jon Bloomfield
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The National Conservatism Conference in London this month heard from leading politicians, commentators and movers and shakers on the British and US hard-right extolling the virtues of Brexit and the potential it opens up for Britain.
They were full of complaints about how these opportunities were being thwarted by a range of insidious forces – the 'Remainer elite', the blob, cultural Marxists, Conservative non-believers – but the underlying thesis was clear.
As Douglas Murray so graphically put it, even if the Germans had "mucked up" twice in the 20th Century, nationalism was the future and Brexit – having freed the UK from the shackles of Europe – was the opportunity.
As one of the conference speakers, Matthew Goodwin, wrote in a follow-up article, "Brexit ushered us all into an incredibly exciting and entirely new era in our national history. An era of democratic accountability in which Britain has once again become a self-governing, sovereign nation".
But UK car-makers haven't got the message.
The end of the conference coincided with the publication of the evidence to a government committee by the world's fourth-largest car-maker, Stellantis, calling for an urgent renegotiation of the UK-EU Trade and Cooperation Agreement (TCA). Without it, car production within the UK would be threatened along with up to 800,000 jobs in the automotive and associated industries. Jaguar Land Rover and Ford followed suit.
The timing of the two events served to highlight the fallacy of the Brexiters' favourite claim – that our departure from the EU means we have "once again" become a "sovereign nation".
Unsurprisingly, there was no press coverage on the contrast, despite its potential devastating impact. In the technical language of its submission to the inquiry, Stellantis stated its concerns "on the impacts of the competitiveness of the UK as a player within the global automotive industry with the planned tightening of the Rules of Origin for batteries in 2024".
Current post-Brexit rules require that 40% of an electric vehicle's parts by value – the Rules of Origin – are to be sourced in the UK or EU if it is to be sold on the other side of the Channel without a 10% trade tariff. The proportion is due to rise over the next three years and, with most battery production still occurring in China, this means that vehicle manufacturers could fall foul of the rules and be forced to pay the tariffs. That would make their vehicles uncompetitive.
With UK production already in crisis – British plants built only 775,014 cars during 2022, the lowest annual figure since 1956 – the prospect of severe, structural decline and consequent unemployment is real.
The uncomfortable truth that Brexiteers refuse to face is that the nature and span of modern productive industry no longer matches the geographical boundaries of small and medium-sized countries.
Increasingly since the Second World War, economics has slipped the leash of the nation state. Big companies operate at both a continental and global scale, whether in cars, chemicals or aviation. What is currently occurring in the vehicle industry is an urgent drive by the US and EU to make the green transition in transport to match the surge by China.
With the European Green Deal and the US Inflation Reduction Act, governing authorities are shedding 40 years of neoliberalism and offering state subsides, grants and investments to accelerate the climate transition. The Labour Party is showing signs of following suit. Green Keynesianism is in vogue.
To survive, the UK vehicle industry has to remain within the orbit of the EU. That's written into the TCA Boris Johnson and Lord David Frost signed in December 2020 – even if they refuse to acknowledge the fact.
The TCA established a very strong level of protection for regulatory standards and in relation to vehicles on rules of origin. To maintain its tariff-free access to the Single Market in goods, the UK agreed not to engage in deregulation that would give it an unfair advantage over producers on the EU side. The agreement on protecting higher standards means that the UK Government is obliged to follow the rules set by the Single Market.
The TCA secured a notional sovereignty but UK manufacturers still have to operate within the EU's gravitational pull. As Stellantis, Ford and Jaguar are saying, there is no alternative if the vehicle manufacturing in the UK is to survive.
In the short-term, the time-scales on Rules of Origin in the TCA could be adjusted, especially since EU vehicle manufacturers are also having difficulties reaching the new quotas. The Sunak Government, trying to restore economic stability after the chaos of the Johnson/Liz Truss era, will probably seek that type of renegotiation, even if it causes discomfort to its Brexit ultras.
However, to revitalise vehicle manufacturing it also has to confront the taboos of 40 years of Thatcherism and promote an industrial strategy.
Across the EU, governments are using the European Green Deal and national government grants to promote the transition to clean mobility. Battery giga-factories, associated plant and EV charging infrastructures are being built to accelerate the transition away from internal combustion engines. Up to 30 battery plants have been built or identified across Europe. In northern France, the Government is establishing four major factories in the former Nord Pas du Calais coal-mining region.
In its evidence to Parliament's Business, Energy and Industrial Strategy Committee, Stellantis proudly declared that it "has invested heavily in Europe with a battery Joint Venture with ACC and have three giga-factories established across Europe".
The failure of the hugely hyped Britvolt battery project illustrates the shallowness of the Government's industrial strategy. Due to be built at Blyth in north-east England, Britvolt was a start-up company with backing from Glencore and the financial markets, but had no proven technology, no production track record, and no publicly confirmed manufacturing customers. Despite government financial backing, it collapsed in ignominy.
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In response to the committee's question on what the UK can learn from investment in other countries in the establishment of giga-factories, Stellantis wryly noted: "Our recommendation would be to ensure the establishment of giga-factories is done in partnership with industry specialists."
Belatedly, the Government is on the verge of investing in a giga-factory in Somerset for JLR but there remains no coherent attempt to develop the cluster of associated industries in the way the French are undertaking or promoting the type of industrial transition initiatives that the German Government, in alliance with its CBI equivalent, is doing.
What we see is a hobbled Government unable to develop an industrial strategy for one of the country's key industries at a moment of profound transformation. Meanwhile, the ascendant nationalist wing of the Conservative Party and its press acolytes mouth vacuous platitudes about 'sovereignty'.
At the NatCon Conference, the comments of MPs Miriam Cates and Danny Kruger caught the press' eye – but it isn't just on social questions that National Conservatism offers a return to the 1950s. The movement seems blithely unaware that the days of a set of independently-owned, British car companies trading primarily within a domestic market have gone.
Rootes, Humber, Austin, Triumph, Morris will never return. In today's interdependent economic world, companies based and organised simply in the UK are just too small to survive and thrive. Environmentally sustainable, advanced manufacturing can only be secured in cooperation with our European neighbours. All the major car companies know that, as do their chemical and aviation counterparts.
The Conservative nationalists and their ideologues offer a fake sovereignty. It's time to call them out.
Jon Bloomfield is an Honorary Research Fellow at the University of Birmingham and a European policy specialist
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