Photo by Dursun Aydemir/Anadolu Agency/Getty Images
Quite rightly, the details of the process for leaving the EU received only a modest amount of discussion during the EU referendum campaign. Whether to stay or leave was a matter of the country’s destiny over the next 45 years, not the next 2 or 3, and the question of whether it was good or necessary to leave the EU would not be materially affected by how it was done, or indeed whether the process was managed well or badly.
Nonetheless, there was some discussion, by myself amongst others. I noted that if the UK stopped EU contributions dead in 2019 it would create a significant headache for the EU’s 2014-2020 budgeting period (the “MFF”), so it would make sense to continue UK contributions to the end of 2020. I suggested we should phase out EU programmes in stages, to be completed by around 2022.
So neither the money question nor the issue of transition were news. They just weren’t debated in much depth because they were dull details that could be sorted out in due course. The principle of a phased withdrawal process was repeated in Theresa May’s Lancaster House speech, where she set out her 12-point plan for Brexit. Point 12 there called for “a phased process of implementation, in which both Britain and the EU institutions and member states prepare for the new arrangements that will exist between us will be in our mutual self-interest. This will give businesses enough time to plan and prepare for those new arrangements.
This might be about our immigration controls, customs systems or the way in which we cooperate on criminal justice matters. Or it might be about the future legal and regulatory framework for financial services. For each issue, the time we need to phase-in the new arrangements may differ. Some might be introduced very quickly, some might take longer. And the interim arrangements we rely upon are likely to be a matter of negotiation.”
The position of Leave campaigners during the referendum and of the May government since has been that there should be a phased process of withdrawal. The idea that we should have such a phased, time-limited transition process now is not some kind of “betrayal” or “defeat by the crafty EU negotiators” or “surrender to the Soft Brexiteers” (whatever Nigel Farage, in unholy alliance with die-hard Remainers, might say). It is what was always the plan and always manifestly in the interests of both sides.
Reasonable pragmatism here can make almost the entirety of the “EU divorce bill” issue go away as well. For all the talk of pensions and mortgages on buildings, the vast majority of the monies claimed for the “EU divorce bill” are the EU asking the UK to cover the contributions it was scheduled to make in the future, to the end of the current budget round in 2020 and to some extent into the next budget round. We should not accept that we are obliged to make such contributions (for then we could ask for nothing in return for making them and could secure no good will by making them – if I owe you money I don’t do you any kind of favour by paying it). To be sure, the UK agreed to the budget to 2020, but that was a matter of agreeing what the contributions of EU members would be in that period. The EU agreed in advance, under the Article 50 process, that we were allowed to leave before the end of the 2020 budget period. So we wouldn’t be members of the EU and hence wouldn’t be subject to the contributions we had agreed members should make.
But even though we aren’t obliged to pay – and should stick very firmly to that position – we should agree to pay as part of the transition process. Over a period of a few years, we should wean ourselves off the EU, piece by piece, and the EU should wean itself off dependence on our financial contributions. A transition for both sides.
Here’s a rough suggestion for how that might work. In 2019 we exit the EU and hence are no longer included in sending MEPs or voting on EU directives or represented by the EU in foreign policy terms via EU embassies. We also secure the right to sign and determine the start date of our own trade deals with non-EU countries (ie we withdraw from the Common Commercial Policy (CCP)). We make our EU contributions for 2019 and 2020 exactly as originally planned (that means paying about €37 billion more in contributions than if we stopped in March 2019, or about €28 billion including the rebate). At 2020 we withdraw from the CAP, CFP and Customs Union (so customs union membership continues for one year after the end of the CCP) but stay members of the Single Market in respect of other goods and services.
In September 2021 we end free movement of persons but continue for to be subject to EU rules and directives, interpreted via the ECJ, in respect of goods and services covered by the Single Market. A few months later, in early 2022 (say March, before the General Election) we cease to be subject to ECJ rulings and commence the new free trade agreement arrangements we will have agreed in principle by March 2019 (though doubtless a few final details will need to be honed in the light of teething issues that emerge during the transition process).
In 2021 and 2022 our contributions step downwards, dropping to around €8 billion in 2021 and around €4 billion in 2022. All up, the contributions after rebate would be around €40 billion during the transition period. That should be of about the right order of magnitude to allow the EU time to adjust and make future plans. Maybe in 2019 we might see our way clear to throw in an additional €5 billion or perhaps a bit more for minor items (those pensions etc). From 2023 onwards we might want to be in a few EU programmes. Perhaps that might involve contributions of a couple of billion a year. Every little helps.
Overall, then we should see that having a phased process of withdrawal, time-limited, complete before the next General Election and moving to a destination agreed in advance in 2019 — and a process that phases in not only the absence of the EU for the UK but also the absence of the UK’s contributions for the EU — is in the interests of all sides and is what has always been intended. It is not any kind of “victory” or “defeat” for one side or the other, let alone a “betrayal”. It is simply what an endeavour of the scale of leaving the EU was always going to entail.
We’re leaving. Now let’s get it done sensibly.