By John Horam
The mood among Conservatives in Parliament as the summer recess arrived was better than could have been expected a few weeks ago.
This was partly because there were strong expressions of exasperation at the squabbling of the Cabinet and thunderous support for the status quo at every meeting, so all those involved got a very clear message.
But it was also because there was an apparent decision to seek a transitional period for Brexit of substantial length and this appeared to have the support of not only the Chancellor and the Home Secretary but also the hard Brexiteers.
Agreement on something definite at last, instead of the usual empty platitudes! The exhalation of relief was palpable.
I sit on the Lords EU Committee, and we had proposed this way back in December as part of our report on the Options for Trade after Brexit, on the simple grounds that there is simply too much to do in the 20 months or so left before the end of the existing Article 50 arrangements. Then – before the election – no-one was listening.
The result of all this is that the Prime Minister is in a stronger position than comment in the press would have you believe.
But there is nonetheless a clear view that if the position of the Government is to strengthen further, what is required is much more focus and clarity as well as a firm grasp of what if realistically possible (something which at least should put some clear ground between the Conservatives and Labour under Jeremy Corbyn). Moreover, we need this in relation to both Brexit and non-Brexit policy.
By chance I am at the moment two-thirds of the way through the second volume of Charles Moore’s admirably clear biography of Margaret Thatcher, and it is apparent there how much good government relies on clarity of thinking and firmness of purpose.
When tackling the miner’s strike it was there in spades, which helped ensure that the Government eventually prevailed despite more difficult moments than many remember.
On the other hand, when it came to whether the UK should join the Exchange Rate Mechanism there was a lot of muddled thinking and many diverse views, and the result was disaster. (Terry Burns, then Permanent Secretary at the Treasury, had the grace to admit when it was all over that Mrs Thatcher had been right all along in her instinctive view that the whole thing was a bad idea.)
On Brexit, if there is to be a transitional period, then the general consensus is that it should be at least three years, because anything less would not afford sufficient time to get all the detailed work done. The next question is: what are the arrangements during the transitional phase?
My own view, based on the analysis we conducted in the EU Committee, is that the UK should remain in the Customs Union. This meets the needs of many manufacturers (those for instance in the automotive and aerospace industries who are locked in to just-in-time supply chains with continental Europe), deals with the Irish border issue, and gives us control of our borders and laws.
If it lasts for three years it gives Liam Fox time to get some Trade Agreements of our own ready for signature. A Customs Union only includes goods and therefore does not deal with services, but I have always thought that this would require a separate agreement.
Some people say we should stay in the Customs Union and the Single Market, and some people think the two are the same thing. They are not. A Customs Union is an area which has the same tariffs round it; a Single Market is an area where standards and regulations are harmonised.
You can have the one without the other. And in the case of the Single Market the regulations include the Four Freedoms, one of which is freedom of movement of people, so to stay in the Single Market is tantamount to staying in the EU. This therefore is out of court.
Even Labour has recognised this: its current position is to stay in the Customs Union, though it is not clear whether this is on a transitional basis or not. Some people argue that during this interim period we should re-join the European Economic Area, which we left when we joined the EU, but I have a suspicion that this would be more difficult in practice than simply remaining in the Customs Union.
The government would also be well advised to announce their position on this as soon as is feasible, because at the moment companies are delaying investment decisions because of the uncertainty. The longer these non-decisions pile up, the more damage there will be to the economy in the medium term.
We also have to face the brutal fact that the EU may not agree to any of this. We are after still only at stage one, where we have not yet come to an understanding about the exit bill, the EU citizens living here, or the UK citizens living in the EU.
However, if we can clear these hurdles, and then approach the trade talks in a positive way, emphasising how it is both sides’ interests to keep the tariff free areas that we already have, it seems to me that we are maximising our chances of getting a deal that we can live with. In other words: there is a way through here, but it does demand a more positive approach by the Cabinet.
The second necessity for the Government to strengthen its position is for it to spell out and begin to implement a clear vision on general non-Brexit policy.
I have always thought that Governments have an inherent tendency to over-complicate and undersell their policies. It is best to stick to two or three simple and strong themes, and that is especially so when so much political space is going to be taken in this Parliament by Brexit. Being generous, and slightly ignoring my own advice, there are four areas I would concentrate on, apart from the general health of the economy.
Top priority should be a big housing drive, focused on social housing. Everyone who looks at it can see that the in housing the market is broken. The private sector does not have a commercial model that can deliver low-cost housing. Housing Associations can make a bigger contribution, but the elephant in the room are the local councils who at the moment, despite a recent small upturn are contributing a derisory amount.
They should be helped by the Treasury removing the cap on council house building (it would still be subject to the prudential financing rules). It is absurd that they are free to construct swimming pools but not homes. We also need to look at innovative measures to reduce the price of land for council building along the lines of the recent, brilliant Shelter report.
Damian Green, the deputy Prime Minister, chairs the housing working party and Gavin Barwell, who was an outstanding Housing Minister for the short time he was there, is now the Prime Minister’s chief of staff, so I am hopeful that housing will receive the right amount of political heft.
The Conservative party should become again the party of housing as it was under Harold Macmillan, who built over 300,000, mostly council, houses a year, and Margaret Thatcher, who championed the right of council tenants to buy their home.
The second priority should be to implement Greg Clark’s Industrial Strategy, with particular emphasis on technical education and apprenticeships.
Technical education has been a Cinderella under all governments, and the country has paid a heavy price for our lack of skills. We have underfunded it (by comparison with university education), undervalued it, and allowed the pathway through for young people to be hideously complicated.
We have now simplified the system and should back it hard. At the same time we should reduce the rate of interest which university students are paying (currently over six per cent). The total package could be made very attractive to young people and is vital for our future outside the EU.
Thirdly, the Government has not made enough of the blueprint for the NHS, the Five Year Forward View, developed by Simon Stevens, its well-regarded Chief Executive. This is now two or more years down the line, and much good work has been done under it.
More money will be needed, not least to restore morale after the long and damaging dispute with the junior doctors and to give nurses a better deal. But as Sir Mike Richards, the retiring chief inspector of hospitals, said this week, much can also be done by levelling up to the efficiency of the best hospitals and improving co-operation with local councils over care for the elderly.
Finally, we need to introduce some limited flexibility into public sector pay restraint, not just for nurses but for all areas where there are staff shortages. We should also monitor closely the roll out of Universal Credit, and fix the glitches quickly, so that we are seen to be doing all we can to help those who are on low pay.
Hung Parliaments are not as unusual in British politics as people think (this is the fourth I have seen since I became an MP in the 1970) and there is no reason why this one cannot be successful if the Government is focused and realistic.