David Gauke: I’m a convinced Remainer – but believe nonetheless that the EU has mishandled its vaccine policy

27 Mar

David Gauke is a former Justice Secretary, and was an independent candidate in South-West Hertfordshire at the recent general election.

At Thursday’s virtual European Council meeting, the EU stepped back from imposing a vaccine export ban. This is just as well.

At a time when all nations face the same enemy and seek to apply the same solution, the case for international co-operation is overwhelming. We all know that maximising the production and take-up of the vaccines is the way out of the Covid crisis, and we all know that using global supply chains should be the swiftest way of producing the vaccines we need. Talk of export bans makes this task harder.

For some on the Remain side of the Brexit debate, there is an instinctive desire to defend the EU and cast the UK as vaccine nationalists or selfish panic-buyers and AstraZeneca as contract-breakers, arbitrarily favouring one customer over another.

It is, however, an unconvincing case. In contrast, had the EU proceeded to block vaccine exports to the UK, its behaviour would have been indefensible.

If one believes in open markets, removing trade barriers, building up trust between trading partners and honouring contractual obligations, one should be prepared to be critical of EU behaviour contrary to those values, regardless of where one stood on the subject of Brexit. I am sure many Leave voters who share these values must, from time to time, hold similar views about some of the actions taken by the UK Government.

Some have defended the proposed export ban stating that others are doing it. It is not much of a defence, but it is true to say that the US – under both Presidents Trump and Biden – has used legislation to prevent vaccines manufactured in the US from being exported. The Indian Government has also stepped in to prevent the export of doses. On the charge of vaccine nationalism, the US and India are guilty and the EU, as yet, is innocent.

The charge that the UK has a de facto export ban is, however, nonsense. There is a clear distinction between an entity not being provided with vaccines because the export has been blocked by government action, and an entity not being provided with vaccines because it has no right to it because they have already been acquired by someone else.

Underlying the EU case is a confusion between the entity producing the vaccines and the country in which the vaccines are produced. Some EU leaders have argued that it is not right that a large proportion of ‘EU vaccines’ have been ‘exported by the EU’. As the Taoiseach, Micheál Martin, pointed out earlier this week ‘these are not European Union vaccines… these are vaccines paid for by other countries that are manufactured in Europe.’

Is it right for the EU to characterise AZ as the villains of the piece for failing to fulfil its contractual obligations? When this row first blew up in January, the Commission argued that once the procurement contract was published, it would be clear that AZ was in breach.

The contract was published and it established no such thing. Without delving too far into the complexities of contract law, if AZ were failing to allocate vaccine doses to the EU in accordance with its contractual obligations, it would be open to the EU to seek legal remedy. Given that the EU is not doing this suggests that the Commission has little confidence in its legal position that AZ is in breach of its contractual obligations.

Did AZ agree better terms for the UK than for the EU? This may well be the case, and would be consistent with the Commission’s lack of confidence in its legal position. Does this mean that the UK engaged in sharp practice in the deal it got? No. First, competently negotiating a contract is no sin. Second, the UK – and the UK taxpayer – played an important role in developing the vaccine, first with Oxford University and then with AZ. This engagement enabled AZ to ramp up its production following an agreement signed in May 2020, months before the AZ/EU deal. This early ramping up of production, by the way, has probably helped not hindered the EU.

There is a comparison to be drawn with Germany and BionTech. Germany supported BionTech, which developed the vaccine that is being manufactured by Pfizer. In contrast to the UK and AZ, Germany did not nail down priority supply either for itself or for the EU.

As a consequence, many Pfizer doses are manufactured in a country that refuses to export to the EU or is exported from the EU to those who have placed an order. It would have been perfectly reasonable for Germany (or the EU) to say “we’re funding the research and development and agree to purchase the first X million doses”. But neither Germany nor the EU chose to do so. Again, that is not the UK’s fault.

The botched procurement by the EU is the route of many of the problems. The Commission was focused on the wrong issues in the circumstances, worried about the price and liability in the event of vaccines causing harm. Speed mattered and gambling large sums of money at an early stage was the right thing to do, as the UK demonstrated. The Commission, perhaps because it does not have its own tax base on which to call, was more hesitant.

Many a commentator has speculated that, had the UK still been part of the EU, we would now be stuck in the EU slow lane. However, it is inconceivable that a UK Government seized of the need to make rapid progress on this front would have surrendered control over the vaccine programme.

In all likelihood, an alliance of the UK and Germany would have ensured member states retained control, resulting in greater urgency in vaccine procurement. As members of the EU, we were a consistent voice of scepticism towards greater integration and, in this particular matter, our absence has been to the EU’s detriment.

Where does that leave us? The EU is well behind the UK in the vaccine rollout, it does not appear to have a legal remedy against AZ (presumably because AZ is fulfilling its ‘best endeavours’ contractual obligations) but the relationship between the EU and AZ remains toxic. The immediate threat of an export ban has dissipated but EU politicians are under immense political pressure. Until this pressure eases, the risk of a foolish intervention by the EU remains.

This incident also emphasises that our relationship with the EU matters. On this occasion, the European Commission has behaved very badly in the same way that I think the UK has behaved very badly over the Northern Ireland Protocol. But we must do more than just apportion blame. We have to make this relationship work because, if we do not, both sides have the capacity to do the other side a lot of harm. More often than not, the smaller party – in this case, the UK – will come off worse.

On both moral and legal grounds, the UK is in a strong position in the vaccine dispute. But the wise approach would be to reduce tensions. The national interest would be served by making some contribution to helping them out, even if the Commission doesn’t really deserve it.

Nick King: Johnson’s Reset. The Government needs business if it’s to build back better.

22 Nov

Nick King is a Research Fellow at the Centre for Policy Studies

Much has been written in the last week, on this site and beyond, about what a Government ‘reset’ might look like, following Dom Cummings and Lee Cain’s departure from Number 10. Broadly. those perspectives have focused on what might be termed ‘the three Ps’ of positioning, people and policy.

In terms of positioning it has been argued that Number 10 needs to take a less confrontational approach – whether that is towards the media, public institutions or, indeed, Conservative backbenchers.

On people, the part played by the indomitable Carrie Symonds and the increasing importance of Allegra Stratton has been acknowledged, but the search continues for the right Chief of Staff to promote and protect Boris Johnson’s own interests.

The issue of policy is perhaps the least clear cut, with competing views espoused as to whether or not the Government can be the party of Workington as well as the party of Notting Hill. My own view is it can and it must.

But there is a final P which needs to be thrown into the mix – not as a fourth horseman, but as a corollary of the three Ps – and that is the private sector.

The fact is that British business is at a low ebb right now, in terms of performance, confidence and its relationship with Government. Covid-19 is the most obvious explanatory factor for those first two issues – forcing millions of businesses up and down the country to close will take the wind out of their sails however generous the set of support packages provided. But introducing those measures only serves to make the job of working constructively with British business all the more important for government. On this task, it has been found wanting.

Across industries, sectors and different parts of the country, there has been consternation and confusion as different restrictions have been introduced, without any (published) economic analysis of the potential impacts or of the evidence base upon which these decisions have been made.

As we approach December 3rd, businesses remain in the dark about whether or not they might be able to reopen, despite the long lead times needed for various parts of the hospitality sector in particular (a sector whose import will perhaps never be as keenly felt as it will be in December 2020).

That businesses don’t feel like the Government supports them is hardly new news, however. Successive polls commissioned by my think tank, the Centre for Policy Studies, has shown that a clear majority of small businesses don’t think that the Government is on their side. Indeed, the Government’s own survey data shows that only a quarter of businesses think government understands business well enough to regulate it. But in the context of a national economic shutdown, this is simply not good enough.

This is not to say there aren’t people around Government who understand business, or who are keen to support it. Rishi Sunak, Alok Sharma, their political teams and Departments are obviously on businesses’ side, as is Ed Lister and Alex Hickman’s business relations team in Number 10. But the disregard of other influential figures towards business has meant that much of the private sector has failed to get a proper hearing throughout 2020.

The anticipated ‘reset’ is an opportunity for the Johnson administration to put that right. Which duly brings us back to our three Ps.

On positioning, the Government needs to be unapologetically pro-business, free enterprise and open markets. The Conservative Party must defend the role of enterprise and the private sector and be resolutely on the side of the millions of small business owners up and down the country. This is important ground both ideologically and politically – and ground which the Conservative Party is in danger of ceding if it isn’t more full-voiced in its support for business.

In terms of people, Andrew Griffith and Neil O’Brien’s recent appointments are welcome, and will help emphasise the role of business, but change is needed in Number 10 itself. A Chief of Staff with extensive private sector experience would be welcome but, failing that, an understanding and sympathetic attitude towards enterprise should be regarded as a sine qua non. Just as important is for Number 10 to have a strong and expert voice for business sitting within its policy unit. That there has not been a business policy function sitting within the policy unit since David Cameron was Prime Minister is extraordinary – the existing business relations team needs to be strengthened and given a proper policy role.

Which brings us onto the final P of policy, which is the most important of ‘the three Ps’. Positioning and people are all well and good, but fine words doth butter no parsnips, as they say – so Johnson needs to ensure his Government is putting business front and centre as he looks to build back better.

Post-pandemic, securing growth is the only game in town. Without that there is no hope of new jobs, greater opportunities or improved living standards – whether in Workington or Notting Hill. And none of this can be achieved without unleashing the awesome and dynamic power of the private sector.

An important starting point would be to curtail the steadily increasing regulatory burden on business. Each measure, taken on its own merits, seems important and its impact trivial to business. But the corrosive, drip-drip effect takes its toll and as growth flatlines and productivity stagnates, politicians stand with their hands on their hips, double teapoting, wondering why.

Take the recent HFSS (foods and drinks high in fat, sugar and salt) consultation for example – likely to cost British industry hundreds of millions of pounds. No doubt full of noble intent, but hardly what the economic doctor might order as we look to recover post-pandemic.

More worrying still are the suggestions that we will increase both the rates and the scope of business and enterprise taxes in 2022. This is no way to stimulate and incentivise the businesses who are our only way out of the economic morass in which we find ourselves. Rather than clipping its wings, the Government should provide the wind to help business soar.

Speaking of wind power, the vital role of the private sector was clear in the Prime Minister’s 10 point plan for a Green Industrial Revolution. But the truth is that few of his priorities can be achieved without the business community. Levelling up? It requires business investment and private sector jobs in the North and the Midlands. Net zero? Industry needs to transition and innovate our way towards it. Protect the Union? Champion our British businesses and demonstrate our reliance on the free flow of goods and access to important markets both north and south of the border. Global Britain? Remain open to inward investors and get more companies exporting.

Pfizer, BioNTech and other companies have all too ably demonstrated just why we need the private sector recently – it’s the key to solving so many of our problems. Which is why Boris Johnson needs to put it front and centre through his reset exercise.

A reformed Number Ten must get on the front foot with business relations and business policy. It needs to articulate a clear vision of our post-Brexit future, rooted in entrepreneurship, investing in success, focused on innovation, with a skilled workforce, trading with the world and built off the back of our brilliant SMEs. That’s a reset worth waiting for.