Back in Brussels so soon Mr Davis?
As the Barnier-Davis show gets back on the road (there's one born every minute you know) I keep looking at my little pie chart of the time gone since the Article 50 process began, and the time remaining. |
| Photograph: Thierry Charlier/AFP/Getty Images |
We're going to cost each of the EU28 a lot of money with our Brexit antics, but most of all ourselves.
What do people think "all that money" we "send to Brussels" is for? Buying wine and slap up meals for "unelected bureaucrats"? Helping other countries to become competitors? Helping other countries to become customers? Running the European Court of Justice which among other things sorts out trade disputes which happen even within a single market and a customs union?
A chunk of that money is currently running the EU27's side of the Brexit negotiations, and a chunk of the money we (including all our expat taxpayers in the UK) "send to London" is funding 450 civil servants in the Department for Exiting the European Union, which is soon to grow further, and 400 extra staff at Defra. There are also 3,200 staff at the new Department for International Trade, and we're paying for Laim Fox and his teams to jet around the world not signing trade deals, because they can't.
A lot of these staff are transferred from elsewhere within the civil service, already shrunk by "austerity", and a lot of them are finding it very stimulating work, but hundreds have been recruited at an extra cost so far of £400 million. And what are they not doing now that was obviously vital or they wouldn't still have been doing it after all the Osborne cutbacks? The EU27 are paying as well for work within their own governments to react to every move the UK makes (not many in public) and the many questions and initiatives from Barnier's team.
But the big question in this country, we're told, is the "Brexit bill", or "final financial settlement" as the EU27 puts it, with hard Brexiters protesting that "they've had enough out of us over the years; not a penny more", as if it hadn't been spent on anything, and May and Davis maintaining the position that "Britain recognises its obligations".
David Davis, introducing the July negotiating round on 13 July, said: "On the financial settlement, as set out in the Prime Minister’s letter to President Tusk, the Government have been clear that we will work with the EU to determine a fair settlement of the UK’s rights and obligations as a departing member state, in accordance with the law and in the spirit of our continuing partnership. The Government recognise that the UK has obligations to the EU, and the EU obligations to the UK, that will survive the UK’s withdrawal—and that these need to be resolved".
This followed Foreign Office questions in the Commons at which our I-can't-believe-he's-foreign-secretary Boris Johnson raised a cheer and a few headlines by playing along with a planted question. As the BBC reported, "The foreign secretary was responding to a question from backbench MP Philip Hollobone, who urged him to tell the EU they could 'go whistle' if they wanted 'a penny piece more' than the money the UK had already paid to the EU since 1973".
To which Johnson replied that "go whistle" would be a perfectly sensible response to an "extortionate" demand, thereby dodging the drift of Hollobone's question, setting up and knocking an extortionate straw man, failing to define the word, hardly saying anything at all in fact, but getting the front pages. Job done! Though he had a pretty poor review from the FT's legal commentator David Allen Green.
"The day the whistling stopped"— David Allen Green (@davidallengreen) July 15, 2017
On Boris Johnson, other ministers, and lack of realism about Brexit
By me, at @FThttps://t.co/KOsvMvZfGf pic.twitter.com/1QyCxITtEN
And Barnier, at a press conference, remarked that he could hear no whistling, just a clock ticking.
Real estate news
One of the many effects of the Brexit vote is that two EU agencies will be moving out of London. Canary Wharf was the obvious location for the European Banking Authority once we'd won it, what with London flagging itself as the financial centre of Europe. The authority "works to ensure effective and consistent prudential regulation and supervision across the European banking sector... to maintain financial stability in the EU and to safeguard the integrity, efficiency and orderly functioning of the banking sector".
The European Medicines Agency is just down the road. It's "responsible for the scientific evaluation, supervision and safety monitoring of medicines in the EU". According to Private Eye 1448 it also has a 30-year rental contract with no early termination clause for its "plush Canary Wharf headquarters". The UK government might find itself with 20 years of rent to pay, at an annual €25million. I'm sure they'll think of something to do with it.
Until April the British government seemed to be holding out some hope of keeping the agencies where they are, despite withdrawing from supervision by them (and then of course trying to wheedle, or rather buy, our way back in as close as possible). But that's not the way the EU works. It was hard enough for London to get the EBA in the first place, with an initial assumption that it would be placed within the eurozone, but it certainly isn't going to be allowed to stay outside the EU as a whole.
And so, at the EU Council in June, leaders agreed a process for relocating the agencies and a mad scramble began among the other EU capitals to win the glittering prizes. The deadline for bids is 31 July, and the final decision will come on 14 November.
Paris and Frankfurt look likely frontrunners for the EBA, though several other countries have expressed an interest. Around 170 people, citizens of many EU countries, might be expected to transfer to the new location, though Private Eye points to the possibility that they might also be attractive to the Bank of England and other financial companies if they would rather not leave London.
Competition for the Medicines Agency looks more open, with the number of bids going into double figures. Relocating the EMA to Bucharest is a "priority objective" for the Romanian government, and the Netherlands is offering a "tailor-made building in Amsterdam’s business district", to give just two examples.
Elbows will no doubt be tugged and strings pulled, but there are six criteria to govern the selection of the lucky new locations:
- Assurance that the agency can be set up on site and take up its functions at the date of the United Kingdom’s withdrawal from the Union
- Accessibility of the location - looking at flights to the city and public transport within it
- Existence of adequate education facilities for the children of agency staff - keeping their children at established schools might make London attractive to some, but they'll also need new jobs
- Access to labour market, social security and medical care for children and spouses
- Business continuity - this ties in closely with the first point and includes acknowledgement that staff might choose not to relocate and therefore need replacing in time to be up and running on "exit day"
- Geographical spread - attempting to prevent the clustering of EU organisations in too few cities
What will the effects be for London and the UK of losing these organisations? It'll be more than the loss of a few customers at Canary Wharf eateries and less than the collapse of the banking sector and medical testing in this country.
In banking we're probably fairly well set, not least because the British regulators have worked closely throughout with the EBA (and a revolving door has operated between them and London private companies) but the UK government has to decide what relationship to try to (re)build with old friends in a new tower block hundreds of miles away.
The EMA is more interesting. I've seen a select committee quiz legal, scientific and university witnesses on the likely effects, and the response was cautious. The UK has built up a lot of expertise and personnel in the medical research and certification field. Indeed, we've contributed greatly to the development of the organisation and the British Medicines and Healthcare Products Regulatory Agency is the most active in any country, contributing 20% of the EMA's work. The MHRA will have to "launch a huge recruitment drive" though "when it becomes responsible for approving all new drugs aimed at the British market" (Private Eye 1448).
One big unanswered question (among so many) is how well recognised the MHRA would then be in the world. The EMA is one of the big ones, recognised at the top level. How would the UK's sizeable but unproved minnow fare when up against the US Food and Drug Administration?
Speaking of the FDA, it looks like a good place to find out what might be going on in this area - the UK government isn't going to tell us. So, in March, FDA News told us that the Lords select committee "advised the UK government to consider whether it intends to rely on EU agencies — including the EMA — post-Brexit and to decide the extent to which it plans to work with those agencies" and in June that "each pharmaceutical company’s Qualified Person for Pharmacovigilance ... will have to relocate if they are based in the UK. Pharmacovigilance master files also must be located within the Union". That last bit looks like something of a threat to the continuing research and certification structures in the UK, and a possible motive for companies to shift their focus to the new EMA location.
All that money
There is much talk of a "divorce bill" of €30 billion, €40 billion, €60 billion and the daddy of them all €100 billion, which is often blamed on the EU Commission but really came from the Financial Times. No number has actually been announced, or at least not in the run-up to negotiations. According to the EU27's negotiating guidelines (and they're making the running, it's their Article 50) the aim is to agree a "methodology" or formula for calculating any settlement before moving on to other areas of the withdrawal talks, and eventually the future UK-EU relationship.
Barnier published a position paper on the financial settlement in preparation for the July negotiation round. In the annexes to that document are various lists to inform the calculation. I constructed the list below from Annex 1 - bodies and funds to be considered when looking at assets and liabilities. It was all I could fit onto one page, reproduced here.
If you look very closely you'll see the two agencies we looked at earlier, for banking and medicines. There are others we have to work out a relationship with - Europol (run by Rob Wainwright, a Brit) and the Aviation Safety Agency for example. Easy, will come the line, it's in everybody's interests to keep the good relationships running. But all of these run under EU law, overseen by the dreaded European Court of Justice, and associate membership just isn't going to be as good.
Until the press conference on Thursday
Here is the agenda for the July talks. Apparently no real work was done during June (clocks ticking) so the priorities for this month are exactly the same as those for last month:- citizens' rights - setting the UK's "generous" proposal which takes rights away from everybody against the EU's earlier proposal, which doesn't, but might involve the ECJ
- financial settlement
- "other separation issues" which I wait to see in detail
- and Ireland (as the EU says) or Northern Ireland (as Davis says) - if they can sort out a solution for the north-south border a lot of other Brexity things might fall into place, but that's a big if.
Saboteurs department
Dominic Cummings, eminence grise of Vote Leave, has been at it again. Reported in the Sunday Herald, and all points south, he reports that "DD is manufactured exactly to specification as the perfect stooge for Heywood: thick as mince, lazy as a toad, & vain as Narcissus"
Key: DD is David Davis, Heywood is Jeremy Heywood the cabinet secretary, who Cummings believes to be plotting with Davis and Spreadsheet Phil Hammond to spring a long transition period on us.
