What kind of country the UK should aspire to be?

By Peter Foster

When a diverse group met at Ditchley in mid-March to discuss "what kind of country the UK should aspire to be" at home and abroad, it was already clear that the world was changing. The splendidness of the setting and Ditchley hospitality only added to the sense of this being a "last hurrah" for a lifestyle that was soon to be overtaken by events.

For two months the coronavirus blast wave had been radiating outwards from Wuhan in ghastly slow-motion. Already Italy was by then fully engulfed by the crisis and while intellectually - epidemiologically - everyone knew it was inevitable the UK must suffer the same fate, or worse, there remained a slightly unreal quality about what was to come. It was still possible to harbour a sliver of hope that Italy’s experience would be the outlier. The day delegates left Ditchley, March 14, the UK death toll doubled to 21. The fire was clearly taking hold, but we were still at the very bottom of the exponential curve.

But three months and more than 60,000 excess deaths later, enough has happened to make it worth trying to re-imagine the conversation of those three days in the light of what we now know of Covid-19. The exam question had been “how can we unite at home and what role do we want to play in the world?” and the answers to both those questions must be modified in the light of the pandemic, though to what extent will depend on several known unknowns: How quickly a vaccine or treatment emerges; how deeply the global recession bites; how steeply the death toll rises again when the second wave strikes.

But starting with the home front, it is already clear that the defining task of this Parliament will not be delivering Brexit, as we so recently presumed, but the response to this pandemic. And if anyone thought, for a saccharine moment (when the country united with newfound respect around carers and keyworkers), that coronavirus would bring us a more united politics, it already seems obvious that that is not the case. As the death toll has risen and the government has been challenged over its handling of the crisis - from the £450m it spent on its ‘Blitz spirit’ Ventilator Challenge, to the protective equipment shortages and the wave of Covid deaths in care homes - it has been remarkable how quickly the culture war elements of the Brexit debate have mutated to infect Britain’s post-Covid politics. The conference was aimed in part at looking at how the country could ‘move on’ from Brexit, but the response to Dominic Cummings’s bending of the lockdown rules suggests coronavirus will magnify divisions exposed by Brexit, not heal them.

For now, the government remains wedded to the ‘levelling up’ agenda that the conference discussed at length, but its commitment to this will be severely tested over the next four years. Several of the older heads in the room expressed doubts that the Treasury (based on past performance) would ever really fiscally empower the regions. Coronavirus arguably provides a moment to do just that, but it remains to be seen if the pandemic catalyses or constrains the delivery of those manifesto pledges to invest in transport infrastructure, science and skills training, particularly to improve lives in the so-called ‘Red Wall’ seats. The “meanness” (as one vice-chancellor put it) of the coronavirus bailout for universities clearly indicated the government’s determination to drive through its education reform agenda, re-focussing on Further Education. The government has also already committed in its March budget to a £4.2bn fund for urban transport and a £3bn national skills fund; the question remains whether that money, assuming it materialises, will be spent by central fiat from Whitehall or handed over to those closer to the ground. We await to see, for example, if heavy-hitters are given control of the revitalised Northern Powerhouse and the Midlands Engine, and if they will get real or Potemkin powers. As one regional mayor said to me recently, “we don’t want to be levelled-up by Westminster”.

At the same time, the mounting costs of coronavirus to the Exchequer look set to force hard political choices on the Johnson government. When Rishi Sunak delivered his spring budget on March 11, the fiscal deficit was forecast to be £55bn in the 2020-2021 tax year. The OBR now predicts it will increase nearly sixfold to £298bn. Crudely put, before coronavirus the Conservatives had promised to deliver the goods to the new voters ‘on loan’ from the Midlands and the North without raising taxes on the traditional base in the South. That particular piece of cakeism, if it was ever really possible, surely looks untenable now. If the government wants to be able to show it has started to make a real difference to the towns and cities of ‘red wall’ voters when they go back to the polls in 2024, it will need to confront the choice on tax. After Coronavirus has exposed the cost of a decade of spending cuts, particularly at local level, further austerity surely cannot be the answer. If Mr Johnson is determined that those new voters must not be left feeling betrayed, yet again, something will have to give.

Devolution is another area where the debate has been sharpened by coronavirus in a way that many of us would perhaps not have anticipated. The issue is not confined to English devolution, where the government is still promising to produce a White Paper in 2020 and look to rationalise the scattergun approach of recent years. Coronavirus, particularly the handling of lockdowns, has also provided an unprecedented opportunity for the devolved governments of Scotland, Wales and Northern Ireland to differentiate themselves from decisions taken in England. The delivery of Brexit and the need to create and enforce a new UK internal market outside the EU single market, was always going to create potential frictions between Westminster and the devolved governments, but coronavirus has had a multiplier effect, most obviously in Scotland. During the conference there were those who argued that devolution had manifestly failed north of the border - both in quieting demands for full independence and in the delivery of weaker health and educational outcomes. But just as with Brexit, it may not be rational economics or social metrics that drives political choices. At this early stage, coronavirus seems to have magnified this issue, not relegated it to the background.

Looking abroad, the ‘Global Britain’ agenda on which the government campaigned is already bumping up against some of the hard realities that were foreseen at the conference, as the UK adjusts to being a middle-sized power squeezed between the two regulatory behemoths of global trade - the EU and the US - both of which are demanding the UK make hard choices about where its loyalties and interests lie. The coronavirus pandemic looks only to have increased the pressure on the fraying post-War international order, the remnants of which the group agreed provided “valuable guardrails for a middle-size power like the UK”. From the unedifying scramble for PPE, to the export bans on generic drugs Donald Trump’s threats to quit the World Health Organisation while imposing fresh sanctions on Huawei and blaming the ‘Chinese’ virus, this is indeed a tough time to be going it alone. In short, Britain’s ‘new buccaneers’ are putting out into very choppy international waters.

The conference had agreed that the post-Brexit UK needed to be more “agile and nimble” as it embarked on its new life outside the European Union. Already the reality of this - being a small ship in heavy weather - is starting to present itself. Fresh US sanctions against Huawei are already forcing Mr Johnson to review his decision to allow the Chinese telecoms giant to build part of the UK’s 5G network - a decision that only a few months ago was held up as an example of the new independence. The combination of a furious phone call from Mr Trump, hardening public and backbench opinion against China post-coronavirus and the simple fact that the UK cannot risk being excluded from US’s regulatory orbit as a secondary consequence of US sanctions is now forcing a rethink. 

On Brexit, where many at the conference presumed the government would give itself some breathing space by seeking an extension, the plan (for now, at least) is to plunge onwards towards a full-blown exit on January 1 2021. The government is adamant it wants full ‘independence’ from the European Union via a very basic Free Trade Agreement. At the same time, it also wants a host of easements to defray the frictional costs of erecting a full-fat customs border with the European Union (recipient of 43% of UK exports) leading to familiar EU accusation that the UK is still trying to have its cake and eat it. The crunch will come in the autumn with the UK betting - once again - that the EU will put relative economic expediency over the principles that underpin its Single Market. That’s a big bet. And already, as early trade talks get underway with the US, tensions are growing in Whitehall over the Department for International Trade’s plan to offer a “big concession package” to the US on agriculture, to the fury of farming lobbies and animal health lobbies. The domestic challenges of riding both horses are only just emerging.

How the UK meets all of these challenges and fast-approaching choices will weigh on the UK’s standing abroad as it tries to navigate the increasingly fraught and complex diplomatic and commercial triangle between Washington, Brussels and Beijing. In his report, written as the coronavirus wave was still to break on these shores, the director described the wider world looking on at Britain as “an outlier nation led by an outlier Prime Minister” who - at that point - was still advocating “markedly milder measures than almost anywhere else in the world and a determination to keep calm and carry on”. As it turned out, that particular piece of British exceptionalism didn’t survive long, to some gleeful mockery in the international media. Getting back from Coronavirus, delivering Brexit and finding a new place in the world will only continue to confront the UK with more hard decisions. Breaking, rather than perpetuating, the bitter impasse of the last four years will now require not foolhardy optimism, but a brave kind of new pragmatism. 

Peter Foster is Public Policy Editor at The Financial Times.