If the Government wants to get on with Brexit de-regulation, it needs to put ministers clearly in charge

1 Feb

Yesterday, exactly two years after the UK left the European Union, the Government announced a “Brexit Freedoms Bill”. Its purpose is to “end the special status of EU law” and “ensure that it can be more easily amended or removed.” 

The Government has estimated that it will cut £1 billion of red tape for UK businesses through the removal of EU regulations, much of which were kept on as a “messy compromise”, as its announcement put it, from hurried negotiations.

Soon after the announcement, Boris Johnson tweeted that “we have taken back control of our money, our borders and laws”. But others haven’t been so sure that Britain has, specifically around legal and regulatory matters.

One newspaper today reports, for instance, that the Government has watered down plans “to ditch Brussels regulations” put together by David Frost, the former Brexit Minister, because they weren’t compatible with its net zero plans.

This has already led to intense criticism of the Government and Prime Minister. At best, they are sending out mixed messages about the extent to which they will light a “bonfire of EU rules”, as media reports have suggested.

It’s long been known that one of the major selling points of leaving the EU was the opportunity to become truly independent, including a divergence from the trade bloc’s regulations, many of which have been blamed for stifling the potential of British businesses. Solvency II, for example, was singled out by Theresa Villiers yesterday in ConservativeHome, which she blamed for forcing “UK-based insurers to hold too much capital back”.

Villiers has been part of a taskforce asked by Johnson to look into how the UK can de-regulate effectively. She, Iain Duncan Smith and George Freeman compiled a 130-page report last year, setting out 100 recommendations for this, based on consultations with businesses, academics, think tanks and colleagues, among other experts, so as to help Britain fulfil its potential.

But today’s news – as well as it being almost a year since the taskforce released its suggestions – hint at wider issues with the Government’s de-regulatory project. First, there are clearly disputes about how far it should go in cutting the red tape. Second, and partly why the Government is sending out contradictory messages, is that there has been no official replacement for Frost since he stepped down in his role last December.

Since his departure, Liz Truss, as recently appointed Foreign Secretary, has been tasked with overseeing the Northern Ireland Protocol; one of the biggest briefs of a Brexit Minister. But government insiders are keen for designated ministers to handle regulatory reform, and hold Whitehall’s feet to the fire.

One contender for having overall oversight of such a project is Steve Barclay, currently serving as Chancellor of the Duchy of Lancaster. However, the responsibility could be shared. Freeman, a member of the taskforce and Parliamentary Under-Secretary of State, Research and Innovation is reportedly keen to manage the 10 sectors most in need of reform, having written about them in great detail in the 130-page report, and feeling that these areas fall naturally into his department.

Given that it has been two years since Brexit, as we have been reminded this week, the delay over action on regulations is not what one would call a “good look” for the Government. With the pandemic, as well as the partygate saga hanging over the Prime Minister’s head, it’s no surprise that Number 10 has been slow to appoint a new Brexit Minister/ authority, or even make noises about the need for it.

But the clock is ticking. With Johnson’s enemies keen to ram home that his government, as well as Brexit, has been a disaster, getting a “Reformer in Chief” is the fastest way to “take back control”.

Did the Treasury seek to punish dissident backbenchers by withholding cash from their seats?

5 Nov

Politics and pork have always been inseparable – and, no, I’m not referring to visits to Beijing by Liz Truss.  If you doubt it, read Andrew Gimson’s brief life of Robert Walpole, Britain’s first Prime Minister, whose take on his colleagues was that “all men have their price”.

The very nature of human beings welds the two together, not necessarily wrongly, even in the best of western liberal democracies.  Constituents want money.  Government has it.  MPs compete to move it from the latter to the former.  So it was in the beginning, is now, ever shall be – and should be, unless you trust dictators with the cash instead.

But there are rules of the game, and a question raised by this week’s events is: are Ministers breaking them?  More specifically: has the Treasury sought to punish dissident backbenchers by withholding Towns Fund cash from their seats?

Some background: the Financial Times reported a claim this morning that some Conservative backbenchers who were wavering over Wednesday’s vote on Owen Paterson “were told that ‘they would lose funding for their constituency’ if they failed to toe the line”.  The story rang a bell.

I’ve heard rumours to similar effect over the last few months – variously referencing the Towns Fund, the Levelling-up Fund and money for targets seats at the next election.  Some of these named the Whips as the source of threats.  Others, the Treasury.

So what’s the truth of the matter?  Getting to it demands an understanding of the context, which could take one back a very long way.  But to save space, I will start with the last Labour Government, move on to the Coalition and Cameron adminstrations, and return to this Government – Treasury, whips and all.

“Fiddled funding,” the Conservatives fumed in 2002, arguing that Labour was moving “funding away from high-performing councils in the south to Labour-controlled metropolitan councils”.

The Housing Select Committee complained that “the new formulae do not appear to be evidence-based”.  The Times put it more trenchantly: “Labour will tax Tory voters to fund heartlands”.  There was more from the Party in 2010: “shifting money to Labour’s rotten boroughs”, that year’s general election Campaign Guide proclaimed.

And so to the Coalition and Cameron governments – and, in particular, to the 2015 Conservative Manifesto, parts of which were a hymn to spending in marginal seats (gluttons for research punishment should settle down with page 15).

“The way that the Treasury team worked was: you scratch our back and we’ll scratch yours”, one source told me.  It’s important to stress that there was nothing remotely unlawful about what happened under both George Osborne and Gordon Brown.  There will have been authorised and defensible cross-constituency criteria for the funding of each new hospital, road, police station and so on.

The difference between what the Treasury did then and what it has done recently was described to me in this way: “it was ‘do something for us and we may be able to do something for you’.  Now it’s ‘if you don’t do something for us we won’t do something for you’ “.

Which takes us to the Towns Fund, which gained £1 billion last spring’s Budget, and aims to help level up towns and aid recovery from the Covid-19 pandemic.  So did the Government seek to punish rebellious Tory backbenchers by first pledging and then withdrawing Town Hall Funds (before eventually restoring them)?  And did the Treasury lead the charge?  The facts are obscure.

MPs who I’ve spoken to agree that, in a few cases, the Government attempted to withdraw funding to which it was already committed from towns represented by independent-minded backbenchers, pleading new pressures on public spending.

But there is no agreement about why it did so.  One backbencher says he was told that the whips had compiled a list of MPs who would be affected; that the Treasury was responsible for the list – and that, after he made representations, the funding was restored.  At no time was he told that the way in which he had voted or spoken was responsible for the planned cut.

Another tells much the same tale, but with a twist: that, though he wasn’t told by either the whips or the Treasury that the way in which he had spoken or voted was responsible…he was told by other Ministers that the way in which he had voted and spoken was responsible.

Other sources say that the Treasury, not the whips, made the call about which funding to halt.  Steve Barclay was involved in the decision-making, I’m told, but that in itself implies nothing improper.  As the Chief Secretary for the Treasury at the time, responsible for public spending, it would have been odd if he hadn’t been.

Did Rishi Sunak know?  There would be nothing wrong had he done.  But Treasury sources deny it – adding that the Chancellor restored the funding.  So who at the Treasury tried to cut it because of the way MPs had spoken and voted, if anyone?

Had the Ministers who spoke to my source simply got the wrong end of the stick?  The question is important because the Towns Fund, like those projects funded under Labour, the Coalition, Cameron (and indeed Theresa May) would have been financed under established criteria.  Neither Ministers nor anyone else has the right to tear them up to extact revenge or exert pressure.

The new funds are especially sensitive because of the role of the MP.  Sending money from the centre to localities raises an age-old political question – namely, what incentive has a government to devolve power to opponents?

The Towns Fund squares the circle, or tries to, by seeking to involving MPs in decision-making. “The MP (or MPs) representing the town should be invited to engage in the process of designing and agreeing the Town Investment Plan”, its prospectus declares.  The critieria for the Levelling-Up fund go further.

“We expect Members of Parliament, as democratically-elected representatives of the area, to back one bid that they see as a priority,” these declare.

“Such support from local MPs is not a necessary condition for a successful bid…MPs can have a positive role in prioritising bids and helping broker local consensus”.  In my view, there is more to these arrangements than political horse-trading: embedding MPs in local decision-making seems to me a good thing – until or unless it becomes a distraction from their responsibilites at Westminster.

All in all, I can’t find any evidence of wrongdoing, at least yet.  But were any MP to put the claim in the Financial Times on the record, those claimed to be responsible for issuing threats would potentially be in very serious trouble.

There are two readings of events.  The first is that talk of the whips or the Treasury or anyone else seeking to withhold funds to punish MPs is just that – talk, inflamed by the excitable if not hysterical atmosphere at Westminster.  The second is that there’s something in it, whether the money concerned is Towns Fund cash or Levelling Up cash or (moving off taxpayer-funded pots) target seat cash.

If so, anyone tempted to menace his colleagues in this way should resist the urge to do so.  The list of Government Ministers isn’t the cast of To Play the King, even if some of them, now and again, may think otherwise.