The government’s latest moves on Brexit are about theatrics, not legalities

While Brexit talks have been displaced from the front pages by the coronavirus crisis, negotiators have been whittling down their disagreements. They can now see a way through on most of the big sticking points that threatened to block a trade deal at the start of the year—rules on labour and the environment to prevent a race to the bottom, EU access to UK fishing waters and the system for resolving future disputes.

On the rules for state aid, however, it appears there has been little progress. This is now such a bone of contention that the prime minister is threatening to walk out of negotiations if the EU does not drop its demands for legal restrictions on the UK government’s ability to subsidise its own companies. It is even reported that the government will legislate to rip up the commitments it has already made in this area.

It is strange that Brexit negotiations are snagged on state aid. It is strange, first, because the UK’s future trading relationship with the EU is being negotiated by a Conservative government, led by a self-proclaimed libertarian, not instinctively fond of wading into the free market to subsidise businesses with taxpayers’ money. True, there are elements in Boris Johnson’s government including chief of staff Dominic Cummings who do genuinely care about making sure ministers can subsidise British business without any legal restrictions—but that is strange in itself, given that Cummings wrote in 2015 that the “vast majority” of state aid issues in government are mere bogeymen, “easily dealt with if you have a sensible process and reasonable goals.”

It is strange, secondly, because even if this government did want to start handing out more state aid to businesses and industries it liked, it could do so, even if the UK were still bound, after the end of the transition period, by the EU state aid rulebook. UK spending on state aid as a percentage of GDP was 0.38 per cent in 2018: among the lowest in Europe and significantly lower than other comparable countries such as France (0.79 per cent) and Germany (1.45 per cent). Ministers are fighting awfully hard to throw off a yoke so light they can hardly feel it.

It is strange, thirdly, because even if the government wanted both to start handing out more state aid and to throw out the EU rulebook and devise its own sovereign subsidy control scheme, as was promised by a Conservative briefing during the election campaign, the EU has signalled that it is open to a compromise along those lines. In July Michel Barnier acknowledged Johnson’s red lines of no role for the European Court of Justice and no binding EU rules, and diplomatic briefings have gone further still, suggesting that a “framework” for state aid overseen by a body independent of government would be enough.

That leaves a question: why is the prime minister threatening to walk out over this one outstanding area of disagreement in talks? Why, moreover, is he poised to bring forward legislation that would call into question the commitments the UK already made on state aid in the Withdrawal Agreement? The WA, finalised and written into law by Johnson’s own government, says that the UK is subject to EU rules and jurisdiction for any state aid that affects trade between Northern Ireland and the EU, but the Financial Timesreports that upcoming legislation will “eliminate the legal force” of that part of the deal.

There is a cock-up explanation, and a conspiracy explanation.

The cock-up explanation is that the prime minister means what he says: he is doing this firstly to give the UK as much autonomy as possible in a no-trade-deal scenario, and secondly to show the EU that he and his government are ready for that scenario if Brussels won’t back down. That would be a cock-up because it would be so misguided. No deal would be a political own goal when a deal is obviously within reach, and reneging on old deals with your partners is a bad way to get them to do new ones.

Though this is rarely true in politics, the conspiracy explanation looks more persuasive. That explanation is that this move is theatre for a domestic audience. If the prime minister is eventually going to soften his own demands and sell the result to parliament and the public as a hard-won compromise (following the pattern of his “renegotiation” of the Withdrawal Agreement), then he has to be seen to do a bit of hard fighting for it first. A legislative tantrum that enrages Remainers and the EU is not a bad way of achieving that.

More subtly, some of the theatrics may be aimed at EU partners—not as a roundabout way to show EU capitals that the UK wants to be shot of its obligations under the WA and to avoid taking on any others, but instead to use legislation as a way of setting out the UK’s preferred interpretation of contentious parts of the old deal, and pointing to its desired compromise on the new one. “The bill will explicitly say the government reserves the right to set its own regime,” the FT reports. Ignore the political chest-beating, the sound and the fury for a moment: does that really sound like a walkout?