To thine own seat be true (The Tax Take)

Sep 09, 2019

Sunday Business Post, 8 September 2019

While the politicians bluster and threaten, no one should be in any doubt that Whitehall is ramping up for no deal since the change in the Tory party leadership. 

The Scottish Parliament is also making its own preparations.  Its document published on Monday last called Preparing for a no deal Brexit serves more to underline the impotence of the regional assemblies than to inform or reassure the public.  At least the Scots have a working parliament, unlike their Northern Irish Counterparts.   But really, why are warnings about food shortages featuring in any government statement from a Western economy in the 21st century? 

Some months back, I signed up to an automated system of Brexit update emails from the British government.  These explain British preparations for a no deal Brexit on 31 October.  The other week, there were 46 such notices.  They continue to issue every few hours. 

One of these emails in particular caught my eye.  The UK revenue authority HMRC is issuing the so-called EORI numbers – the registration required to import and export goods between EU and non-EU countries - automatically to the traders they think might need them.  The automatic issuing of such registrations requires a fairly heroic interpretation of the way the EU customs union rules work.  EORI numbers have value because they support import and export controls by bona fide businesses.  They are usually only issued on application from legitimate economic operators. 

The British are doling these registrations out to businesses which account for VAT, on the reasonable assumption that many businesses which need them post Brexit haven’t yet bothered to apply.  Even if EU bureaucrats were to get grumpy about this kind of automatic registration, what would that matter to the UK after it has left the EU? 

It would matter very little, except that the strategy appears to have backfired for the most mundane of reasons.  It’s now being reported that many of the British traders getting these registrations are more confused than enlightened by them.  In fact the UK’s Federation of Small Businesses has called on HMRC to clarify this particular Brexit guidance, because of concerns that the existing advice is misleading.  Against such a backdrop it is beyond me that any politician of any hue can claim that British business is ready for the consequences of a no-deal Brexit with just 50 days to go.

From listening to MPs as advocates from all sides of the Brexit debate, it seems that they share a common ground in their capacity to ignore, or (more charitably) be unaware of the impact of Brexit on British industry. This duplicity is essential if they are to retain their seats; it’s a universal imperative for all elected representatives.

It can only be for this reason that otherwise commercially aware MPs are only calculating the impact of their vote in parliament in the context of their own re-election prospects.  It is why Boris Johnson’s threat to de-select rebel Tory MPs carries such weight, because it would cost many of them their seats in the House of Commons.  It is why the Labour leadership could not be 100% confident of total compliance with the party whip on a vote to hold an early general election.  The voters in Labour held “vote-leave” constituencies might see an early general election as a repudiation of their votes in the Brexit referendum and seek revenge on their local MP.

But would outcomes be different if this crippling anxiety to retain a seat in Parliament could be put on hold?  In the US for example, there is the concept of a lame duck Congress.  This is a period of a few weeks where Congress meets after elections have been held, but before the newly elected representatives take their seats and the losers stand down.  Contrary to what its name suggests, a lame duck Congress can sometimes provide the opportunity for bi-partisan cooperation which otherwise might not have been possible.  Such an opportunity in Westminster, when parliamentarians could act outside the constraint of immediate electoral considerations, might now be useful.

Suspensions from the normal rules are being created in the UK, but to unusual effect.  Proroguing parliament extinguished any lingering prospect of bi-partisan cooperation between government and opposition, while uniting the opposition approach in a manner rarely seen at national level since the Lib-Lab pact of 1977.  The British civil service machinery usually goes into a form of lockdown in the weeks before an election or referendum known as “purdah”.   In essence purdah means that nothing official should come from civil servants and government departments which might prejudice the outcome of any election.  We are being told too that the purdah custom will be a victim of the turmoil and that civil service preparations will continue as normal through the chaos.

Official preparations for the worst will therefore continue, with all their attendant costs.  For both Irish and UK businesses, the political machinations are a sideshow and should not be allowed deflect attention from their own preparations for the trading regime with the UK post Brexit.  Until such time as it is undeniably clear to all parties that leaving with a deal does not cost votes, there will be no help for business from the British political system.


Dr Brian Keegan is Director of Public Policy at Chartered Accountants Ireland