Brex(it) In The City

A flippant headline, because this is a very far from lightweight subject. Sometimes being a conscientious citizen trying my best to understand the world feels like drowning. It certainly does where Brexit is concerned.

So last Friday I headed off to The Council House, as Birmingham’s grand palace of local government is quaintly called, for a workshop on Brexit organised by City-REDI at the Birmingham Business School. City-REDI is concerned with the study of city-regions around the world, with the task of developing a sound empirical understanding of the dynamics of regional economies, and associated political and structural questions.  These are my words, and I may have misrepresented their mission, so, also my words, they are clever people who know stuff. and they have been working on a project to study the economic impacts of Brexit on the UK, its regions, its cities, and its sectors.  Basically all the stuff David Davies said they’d done ages ago, then admitted that he was only kidding, and they’d done sweet FA.

And is it terrifying? You bet. But perhaps not in the terms I had expected.

Firstly, the shock of Brexit to the economy, already being felt, but not nearly as much as it will be once we leave the EU, is likely to be three or four times the impact of the financial crash of 2008.  There’s around £140 billion of UK economic activity each year directly at risk because of Brexit.  We know that the regions likely to be worst impacted will be the Leave voting areas, but I hadn’t also realised the extent to which the jobs at risk tend to be more productive than average, so Britain’s already serious productivity problems will be exacerbated by Brexit. Slide after slide was shown, and pretty much all of it looked bad. And remember, we voted to do this to ourselves.

But I’m not writing about this because I want to plagiarise other people’s numbers. I’m sure you can find lots of information on City-REDI’s website if you want to enjoy the jaw-dropping stats for yourself. What really hit me, right from the start, at this workshop was the absence of politics.

Not the careful non-partisanship of the key speakers; that much is to be expected from policy wonks and number crunchers. Brexit is a highly political project, yet the guiding hand of political leadership was seemingly absent without Leave. Ostensibly about manufacturing in the West Midlands city-region, it was two and a half hours in before anyone even mentioned the Mayor, and central government and Parliament more generally, was scarcely referenced.  Senior planners in the Core Cities and the LGA complain that, “Government won’t speak to us”.  And as for the academic experts, they seemed politely stunned by the low level of understanding of some of the biggest political names.  One economist described the ongoing parliamentary debate about Brexit and trade as a political narrative based on a “Corn Law level of understanding of trade” which is irrelevant to global value chains.  A 19th Century ding dong about 21st Century trading relationships? Hell and handcarts beckon.

So next time you hear all the slogans about “they do more trade with us than we do with them”, and big figures about imports and exports, remember this.  They’re talking in terms that made sense in a long gone world of Lancashire cotton, Welsh iron, and Kentish coal.  Surplus/deficit arguments are irrelevant. There are new phrases which some of us have started noticing, about ‘just in time supply chains’, and ‘global value chains’, and what matters in trading systems which operate in ways which are not regulated by national boundaries; indeed, national boundaries are a serious irritant (don’t mention Ireland).

The Concerned Citizens Club in the audience for this wholly informative, non-partisan event seemed to consist solely of anxious Remainers.  This did surprise me, anxious Remainer that I am.  Surely the Brexit supporters would be out in force to hear how their Grand Project was faring, and to offer their analyses and prescriptions?  Their absence was very telling.  Basically the only argument they seem to have left is “Will of the People”.  They won a vote. End of.  That really isn’t good enough, and you can sense they know it.

The only Brexit voice came from a speaker, Justin Benson of KPMG, who had voted Remain, but claimed cheerfully that he would now vote Leave, if another vote were to be held. His reasons seemed entirely pragmatic.  Like everyone else questioned, he shared the assumption that Brexit would happen. So for him, and for the businesses in the automotive sector on which he advised, it was a simply question of as much certainty as possible in the here and now.  Unfortunately, the way he illustrated this, entirely rationally, was by showing how decisions on new models, and where to build them, were made.  And they are made in Munich, or Tokyo, Seoul, or Mumbai.  If Brexit screws up JL-R Solihull, the vehicles will still get made.  Just not here.

But there is a much bigger political, constitutional question which Brexit has brought into focus.

Although no one said it in these words, there was a baseline assumption that central government, and the state itself, was largely irrelevant.  It had caused the circumstances, Brexit, but it was playing little in the way of an effective guiding role in how the country was responding to Brexit, and was doing even less in the way of detailed planning, including contingency planning for an event ostensibly less than a year away.  Local government was doing its best, but was too fragmented, and had too little power, particularly fiscal power.

So my key conclusions from the day were less about Brexit, than about our entire political culture.  The hollowing out of the state, the loss of capacity, the reliance on outsourcing, the replacement of parties which represented sectional interests with parties which game elections, the growth of a career political cadre, and the associated centralisation, and above all, the four decades long battering of local government, all have wreaked havoc on political legitimacy.  One phrase that came up several times through the day was ‘Devolution works’.  The regional authorities set up by Ted Heath in 1974, the Metropolitan Counties, are now being reinvented as Mayors with Combined Authorities, but they have less power than in Heath’s vision.  There’s an awfully long way to go.

We need root and branch constitutional reform, including electoral reform, regional devolution, a less centralised system overall, and a ban on referendums.

And that is just the start.  But first there’s a little matter of Brexit.

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