David Henig appointed to Cavendish Advocacy Advisory Council

David Henig appointed to Cavendish Advocacy Advisory Council

We are pleased to share that we have appointed to our Advisory Council the leading analyst and former trade negotiator David Henig.

He will offer specialist senior counsel to clients on trade issues and intergovernmental decision making.

The implementation of the EU/UK trade deal has thrown into sharp relief the impact that border processes, tariffs and non-tariff barriers can have on industry costs and the ability to access markets. Add to this the Government’s ambitious commitments to striking new Free Trade Agreements and business is aware of potentially significant changes in the trade environment to come.

This appointment is a move by Cavendish Advocacy to ensure that our client base has access to genuine expertise on a new area of competency and is complemented by strategic alliances with public affairs agencies in the EU and USA.

David Henig is Director of the UK Trade Project and had a 10 year career in the civil service that included being a negotiator on the EU/USA Trade Deal, developing policy on sensitive international investment into the UK, working on G8/G7 meetings and establishing the Department for International Trade after the referendum. He co-founded the UK Trade Forum and is a leading commentator on trade issues across UK and International media.

Managing Director of Cavendish Advocacy, Alex Challoner, said:

“For the first time in almost 50 years decisions on trade are being made in Westminster and Whitehall and businesses need to have the ability to shape these. To do that they need genuine insight into how decisions are made, who is important and when the windows of opportunity will arise.

 

We are absolutely delighted to be able to appoint David to our Advisory Council to help meet this demand. He has been “in the room” with trade negotiations and so offers unique expertise that our clients will find invaluable in developing their trade advocacy strategies going forward.

 

David is the initial appointment to our Advisory Council which we will be building on in coming months. The fact that trade is the initial focus for us tells its own story.”

 

Commenting on his appointment, David Henig said:

“I’m thrilled to be supporting Cavendish Advocacy’s trade offer at such a critical time for business.

 

Trade deals involve a hugely complex interplay of international processes and national politics with processes that can seem arcane to the uninitiated. Government and industry are experiencing the reality of trading outside of the EU and attempting to secure deals with economies like the USA, India and China.

 

I look forward to helping Cavendish Advocacy’s clients understand how these deals develop and where they can shape their content.”

 

To find out more about how we can support your business or organisation on trade issues, please email gareth.morgan@cavendishadvocacy.com.

Labour starts to fill in the blanks

Labour starts to fill in the blanks

When people analyse Labour, they tend to do so through the prism of the internal fight for control. Such is the nature of the party that it is the scene for almost perpetual battles over the apparatus and the past five years have seen a particularly ferocious phase in that fight.

Last week saw a few additional pieces fall into place for Starmer and his ability to control Labour – but also a few hints about what he will use that control for in policy positioning terms.

 

Control

First the control part.

This can seem arcane (think Kremlinology) but control of the different arms of the Labour movement is critical to Starmer’s desire to detoxify the Labour brand following the ECHR investigation into anti-Semitism.

The perception of the Leader is of course critical. The product can be as good as you like, but if the salesman is simply not trusted or deemed incompetent then it doesn’t matter. But there are also broader voices within Labour that can undo the positioning work of the Leader and his team.

Starmer started last week with the Leader’s office, his man as General Secretary of party, the vast majority of MPs on his side and a majority on the National Executive Committee.

Last week he saw a supportive new General Secretary of UNISON take over and Gerard Coyne (a former moderate regional secretary close to Tom Watson) throw his hat into the Unite leadership election where the Left candidates are divided amongst each other. The era of Len McCluskey is almost over and there is a fighting chance that his successor will not be from the Corbynista wing.

But the more surprising development on this front was in Scotland. Richard Leonard MSP, Leader of the Party in Scotland, announced his resignation just four months from the next set of Scottish Parliament elections. A Corbyn ally that was feted by his media outriders as the man to turn around Labour’s issues in Scotland is now set to leave the scene. Will it improve Labour’s chances in these elections? Almost certainly not – Leonard was a poor performer but their issues are structural, decades in the making and hamstrung by the Independence debate. But what it will potentially do is put a moderate in charge North of the border – already we have seen Anas Sarwar MSP (a Brownite – remember them?) indicate that he will stand.

The Left and vocal critics of Starmer will remain but are being squeezed out of controlling positions in the party and the Labour movement. They will continue to be noisy on Twitter but in the real world Starmer’s grip is tightening.

The question now is: What will he use that control for?

 

The Family Speech

We got our short-term answer from last week’s speech on “securing the economy for families during lockdown”.

Some of the themes here attracted a lot of attention on Labour Twitter (“family” is a loaded word for some of the faithful) but it was in many ways an exposition of the themes we expected from Starmer when he pulled his team together – family-oriented with lashings of “progressive patriotism” – with 20 mentions of Britain/British and 18 of family/families.

This speech was the starting gun for the English elections campaign this year (Wales is a governing party with its own agenda and Scotland is… a mess). These may well be pushed back from May but local elections including some of the big regional mayoralties are up for grabs and we know now how those will be fought.

Starmer praised the UK being first with a vaccine – lauding British scientists, British research, British business – and called for a national effort (including 24/7 vaccination programme) to make sure we are the first to be vaccinated. Again, the tone is critically supportive with the “national interest” to the fore.

There will be a relentless focus on framing the Johnson administration as incompetent. The UK having the worst death toll in Europe and the deepest recession. Crippled by indecision with Johnson making calls too slow and too late.

He also tried to tap into the frustration with lockdown support but framed it as letting down families – leaning into the frustration with home schooling the 2nd time around and the income protection inadequacies.

The Government needed to support families by:

  • Introducing a right to furlough for parents struggling to cope with home schooling
  • Stopping the “council tax hike”
  • Halting the Universal Credit cut
  • Revising the intention to freeze the pay of key workers; and
  • Extending the ban on evictions

More broadly on the economy he called for:

  • 400,000 green economy jobs (by increasing capital investment and intensifying investment timeline)
  • Creating a “High Streets Fighting Fund”; and
  • Closing the loophole in income support that has left self-employed people exposed

There is no escaping this is a tactical approach, but this isn’t by accident. The policies are calibrated to the lockdown and for the local tier of elections that are coming.

Frustrations abound within Labour that the broad sweep or vision is missing and that Starmer looks to be too much like an Ed Miliband Mk II. But for LOTO this is still more about the framing or narrative of this Government and, importantly, the perception of credibility, competency and “PM-in-waiting” of their man.

 

Mais Lecture

More interesting in many ways was the outlining of the long-term approach to the economy given by the Shadow Chancellor, Annaliese Dodds MP, when she took star billing at the annual Mais lecture to the Business School at City University London.

Dodds currently has a low profile and the public seldom read economic speeches from the Opposition – so this wasn’t about inspiring them, it was about signalling to the markets and media that Labour under Starmer was a responsible alternative focused on the long-term, scrutinising spending to ensure it is delivering and creating a resilient economy that can withstand shocks.

As ever it was criticised by internal critics for lack of ambition (I think they meant desire to overthrow capitalism) but it is worth remembering that with McDonnell this was a key focus too. His “Fiscal Credibility Rule” was a commitment to running a day-to-day surplus while borrowing for infrastructure investment. It was a conservative framing of Labour’s approach to the economy designed to not spook the horses. So too with Dodds – her approach is holding with the substance of McDonnell’s.

She ranged in her speech across monetary policy, fiscal policy, economic policy and scrutiny of spending that was meant to project steadiness and raise questions about Conservative handling of the economy over the last decade. The ideological approach to deficit reduction had not only missed every target it had set itself but had made an economy that lacked resilience in the face of this current shock. In keeping with Starmer’s positioning she shone a light on the current Government and perceived wasteful use of public money during the pandemic.

Some key points to extract from Labour’s approach are:

  • Monetary Policy – Maintaining BoE independence and lauding its contribution during the pandemic, particular focus was on the use of quantitative easing to spread over time the cost of coronavirus to society.
  • Fiscal Policy – A strategic use of fiscal policy that is consistent with her predecessor’s rule. Labour are targeting a balanced budget over the cycle but still allowing for flexibility in times of crisis and for productivity-enhancing investment. Pragmatic rules covering the debt and deficit, longer-term and more transparent budget planning, government accountability and the commitment to provide value for money – would lay the groundwork for a “sustainable, resilient recovery” from the current crisis.
  • Tax and Spending Projections – The Red Book’s projection of tax take and public spending is currently restricted to the next five years. Where possible this should be extended to include a projection of revenue and spend over a 20-year budgeting horizon. Doing so should enable “more honest” debates over issues like social care and gaps in pension provision.
  • Value for Money – She shone an overtly political light on the Government’s record of waste and the past decade of failed/stalled infrastructure projects. Labour would invite the Comptroller and Auditor General to submit an annual report to Parliament, bringing together the NAO’s findings throughout the year into a single assessment of the effectiveness of public spending and ensuring Government responds to that report. Labour would make sure in the Budget the Government would set out its own assessment of the effectiveness of public spending, open to external challenge and scrutiny – “hardwiring value for money and financial control into the budgetary process”.
  • Economic Policy – The role of Government in economic policymaking is about much more than effectively managing the flow of tax and spending. Government must also have a strategic response to the two overarching challenges to our economic resilience – exogenous threats like climate change, pandemics or trade disruption and improving the UK’s economic competitiveness, through industrial policy, modern competition policy, and improving the returns to innovation.

She set out a “responsible approach” to delivering a resilient, jobs-rich recovery from this crisis and a stronger, better future for the 2020s and beyond and promised to make effective use of all economic policymaking levers at the UK Government’s disposal.

That means an independent Bank of England setting monetary policy; a “responsible government” using fiscal policy to ensure public money is spent effectively and wisely; and action to improve resilience, including in the face of the climate crisis, and to deal with challenges to our economic competitiveness.

 

So, in a single week we saw opportunities for Starmer to consolidate control in the party, the starting gun go off for the elections in 2021 and the building blocks for Labour’s approach to the economy set out.

The General Election is some way out and the challenge facing the Leadership is huge, but the party has been neck and neck with the Government for some months and Starmer enjoys superior ratings to his opposite number.

Labour are starting to put in place the building blocks of credibility and to talk a little more about what they would do. Big gaps remain but we need to start listening a little more.

 

If you need help understanding the political landscape or would like to discuss this topic further, please do not hesitate to get in contact with Gareth Morgan. 

A Deal Is Done

A Deal Is Done

Nine months of negotiations are done – the EU and UK have (provisionally) agreed a new trade deal.

The twists and turns of the negotiations that have played out over nine months reached the point this week where negotiating teams had to step aside and let those with a political mandate take over. The past 72 hours have seen the UK Prime Minister and EU Commission President negotiating directly. A final call was conducted at 7am this morning and negotiations are now complete.

Those that have been following the negotiations closely have been acutely aware that all dates for progress have been fluid and seemingly set-in-stone deadlines have been regularly cast aside. Observers have seen briefings that one moment exude confidence that progress was being made, swiftly followed by pessimistic assessments that a No Deal scenario was instead likely. The substance of negotiations versus the choreography necessary to placate domestic audiences has often been hard to distinguish.

However, in the past week it has been clear that we were at the end game where a path to a deal was there, if the necessary compromises could be made.

The top tier negotiating positions have been relatively clear from the start. The UK framed their demands as seeking a Canada-style deal that reflected the desire for “sovereignty” with no jurisdiction from the European Court of Justice. The EU needed a deal that had to be underpinned by fair competition and protected the Single Market, was enforceable in European Courts and could not be as advantageous as membership of the EU. The UK Government consistently claimed it would walk away if required and the EU and its members often said that the UK had more to lose and must be the ones to compromise.

It is doubtful whether any other trade negotiation of this scale has taken place over such a condensed time and with the backdrop provided by 2020. The Covid-19 pandemic, global recession and US Presidential election all contributed to the respective positions throughout and we have also seen flare-ups driven by domestic politics, most notably the UK Internal Markets Bill that threatened to tear up the Withdrawal Agreement signed up to only a year before.

But for all the grand sweep of global politics the consistent tripping points were fisheries, level playing field provisions and dispute resolution. Their discussions have been highly technical where the emphasis has been on finding mechanisms that allow both sides to feel that their priorities are being addressed.

Highly technical they may have been, but they were also, inevitably, highly political. Fisheries in particular has been the example of how a small sector on paper (the EU catch from UK waters is only around £650m) has almost derailed discussions. For the UK it has been a symbolic and easily understandable issue, dating back to the 1970s and with fishing communities in politically important regions (the Red Wall and Scottish marginals). For the EU it has been symbolic too with their fleets set to lose access to historic fishing grounds and angering a well organised and powerful industrial lobby. Indeed, a great deal of the focus of the calls between Johnson and Von der Leyen has been haggling over proportions of catch for specific fish species – a remarkable, granular subplot to this process.

The deal is many thousands of pages long and will be pored over by trade experts from here on in, but key features briefed so far are:

1. Trade in Goods – tariff and quota-free trade in goods between the EU and UK has been preserved. “Wins” being briefed are the EU’s decision to grant third country listing status to the UK and approve exports of meat, dairy and other products of animal origin, plus electric vehicles will be traded tariff-free even if a relatively high proportion of their components come from outside the EU and UK (critical news for the continued presence of Nissan and Toyota in the UK).

2. Level Playing Field – much of the concern had been around fears on the EU side that the UK would have access to their market but could diverge on workers’ rights, environmental standards and state aid that would put its industry at a disadvantage. Progress was made when the UK published its state aid principles and now the deal includes a mechanism for “managed divergence” between the UK and EU, where an independent arbitration system would determine whether divergence bestowed an advantage, which would then trigger retaliatory action in the form of tariffs. In a sign of how this deal will be spun, the UK Govt is already dubbing this the “freedom clause”.

3. Fisheries – the last major sticking point (where a lot of the “betrayal” rhetoric will inevitably be focused) where even last night negotiations on specific fish species were still taking place. The UK originally wanted 80% of the EU’s catch from UK waters returned, a three-year transition period and restricted access to the coastal zone of UK waters (up to 12 miles). The EU only wished to concede 18% and wanted up to a decade long transition. We have ended up with 25% (although British officials are spinning this as Britain’s share of catch in its waters going from half to two thirds) and a 5.5-year transition. Access after that will depend on regular negotiations.

4. Energy Market Access – the cross-border energy market has been preserved. This is literally a case of “keeping the lights on” with imports through those connections vital for the UK during the 2018 ‘Beast from the East’ freeze, our exports to France and Belgium helping them weather the precautionary closure of French nuclear stations two years earlier and Ireland’s route through the UK being their only route to trade with the rest of the EU.

5. No Trade in Services – this is referred to as a “thin deal” as it covers only goods (where the EU has a surplus) and not the services sector that makes up 80% of the UK economy. Of particular importance will be financial services and there is pressure for swift progress towards a separate “equivalence agreement” that will grant UK firms access to EU markets and customers (the UK has unilaterally committed to doing so for EU firms).

Next Steps

The focus now switches to how this deal is applied and the role of the respective Parliaments that have to ratify the deal.

The deadlines that would have allowed the European Parliament to ratify the deal have passed and the emphasis in recent weeks has been on how to adapt to ensure there is no accidental No Deal period between the end of transition and formal ratification.

We expect to see the following:

UK Process – a relatively straight forward process in the UK Parliament will see MPs called back from recess between Christmas and New Year (most likely December 30th) for a straight up vote to accept or reject the deal.

EU Member States – a flexible arrangement to avoid an interregnum No Deal period will be focused on delivering a “Provisional Application” from January 1st. Member State Ambassadors will be briefed this morning and then a process of sending letters to the Commission accepting provisional application will take place.

EU Parliament – The EU Parliament’s ratification process usually involves scrutiny and debate in committees and in plenaries that can take a number of weeks. The provisional application route is ripping up norms (it usually takes place after the EU Parliament has voted and is only used while national/regional parliaments go through their processes) and takes some of the cliff edge tension out of this process. It is likely that the EP will look at the deal during their January or February plenaries.

Beyond the formal processes this deal needs to be communicated to domestic audiences – a consideration that has been there on both sides during negotiations. The UK Government, EU institutions and Member States all have their own political pressures to contend with and need the deal to be seen as a “win” for them and their agenda (Johnson held a Cabinet call last night where he sought their help to sell the deal to colleagues and there have been cries of betrayal already from more hardcore elements).

All sides will draw breath over the next few days but attention then turns beyond ratification to implementation – particularly the changes at the border from January 1st. This deal softens the edges of Brexit but for business it will mean border checks and paperwork which they haven’t had to deal with for almost fifty years. As we have seen in the past few days and weeks disruption at ports can escalate quickly and business groups are already lobbying for sensible grace periods to allow adaptation for the re-labelling of products and phasing in of border checks.

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But for all the above – the timetable, the scale of the challenge, the politics and the backdrop – the negotiators have delivered a deal. Challenges lay ahead but this is a historic juncture and the start of a new relationship with the European Union.

You can find out more about what this deal means by attending the Cavendish Advocacy EU-UK Trade Deal webinar on Thursday 7th January (11am to Noon) with guest speakers which include the Federation of Small Businesses, Rt Hon Damian Green MP (former First Secretary of State) & Miller Meier, our EU partner. Details for registration can be found here.

Forget the Tory majority: here’s why you should still care what happens inside the Labour Party

Forget the Tory majority: here’s why you should still care what happens inside the Labour Party

There are a few hardy folk in public affairs that maintain an unhealthy interest in the perennial fights going on within Labour (sure, laugh now, but you’ll come knocking in two years’ time!) – yes they are obscure, yes they are often over things that are barely relevant and yes they are often tedious…… but every so often they are also potentially important for the country. This is one of those times.

Labour and the trade unions are currently in the midst of campaigns over General Secretary positions in the biggest trade unions – Unison, GMB and Unite – and 18 seats on Labour’s ruling body, the NEC.

This matters because they are critical to control of the party and its future direction. Keir Starmer won the leadership, has the majority of MPs behind him, and has his man leading the party machine, but his opponents are noisy and Unite under Len McCluskey is an awkward fit.

His hold would be complete if he can ensure allies are heading up these unions and the NEC’s balance tips decisively in his favour.

You’d think that the battleground for this contest would be competing visions of the future? Nope. Instead it is competing versions of the past.

Essentially the contest revolves around Jeremy Corbyn and the General Elections fought under his leadership.

The betrayal narrative

For “The Left” there is a betrayal narrative that is key to their ability to hold onto positions, but also to stop their tradition being discredited.

Their version of recent history: Jeremy Corbyn was popular with ordinary people and inspired them to engage in politics. He was undermined by a hostile Mainstream Media, Labour MPs and the Labour Party’s staff. Despite this he registered more votes than Labour in 2001, 2005, 2010 and 2015 and came ‘within a whisker’ in 2017 of becoming Prime Minister. They point to ‘the coup’ (i.e. shadow cabinet resignations and Owen Smith’s leadership challenge), changing positions on Brexit and recent Labour staffer WhatsApp message dossier as evidence that their man (and their ideas) were undermined from within.

To prevent this ever happening again: Labour members need to elect their candidates in the NEC and General Secretary elections.

Different faction, same solution

For “The Right” there is the narrative that rejects notions of betrayal and instead lays the blame on Corbyn, his advisors and media outriders for bringing their own project down and fundamentally damaging the Labour brand in the process.

Their version of recent history: Corbyn was deeply unpopular with ordinary people, 2017 saw people vote Labour because they felt Corbyn couldn’t win so it was ‘safe’ to do so and, despite the surge, saw a record amount of people vote Conservative. They portray Corbyn’s team as indulgent, elite and riven by infighting (see the revelatory articles in The Times over the last few weeks that go into great detail on the 2019 General Election) who allowed Anti-Semitic cranks to enter the party and damage its standing.

To clean up the mess and prevent this ever happening again: Labour/union members need to elect their candidates in the NEC and General Secretary elections.

Fall-out

The past few months have seen moments where this conflict has burst into the mainstream – particularly with the leaked dossier and the subsequent inquiry into it – and the common reaction has been to roll eyes.

That is entirely justifiable but bear in mind that what seems like a tedious, obscure, irrelevant scrap over the party’s past is a critical part of the battle for its future.

We’ll see what that direction is when NEC election results come out in November.

Decoding Corbynism – what will a Labour government mean for business?

Decoding Corbynism – what will a Labour government mean for business?

We were delighted to host leading Labour Party thinkers Catherine West MP, Dr Faiza Shaheen, Miatta Fahnbulleh and Matt Zarb-Cousin yesterday for our breakfast event “Decoding Corbynism: What will a Labour government mean for business?”.

We have written up a note of the event and an updated version of our report Preparing for a Labour government is also available to read.

Our top three takeaways from yesterday’s event:

1.At its heart, Corbynism is about tackling a sense of economic injustice that is felt amongst swathes of the electorate. The appeal of Corbynism is rooted in many of the issues that gave rise to the Brexit vote.

2.The party’s business agenda is nuanced beyond nationalisation (and where this does occur, there will be accountability and democratic control rather than state bureaucracies). In particular, the party is keen to support small business, level the playing field vis-à-vis larger businesses (with a focus on paying a ‘fair share’ of tax), and rebalancing the relationship between workers and employers.

3.The party’s next manifesto will be more radical, not least because 2017’s platform was essentially a braver version of Ed Miliband’s policy prescription. The party is in policy formation mode now, but is starting the process in communities around the country rather than in Westminster. If the next manifesto is to be more radical, the party will propose redistributing wealth by introducing new taxes on capital.