The prime minister won’t get everything he wants—and nor will universities
Back in September, prime minister Boris Johnson wanted a general election on 14 October if parliament voted to block a no-deal Brexit. MPs did block it, in the form of the Benn Act, and his call for a general election failed. Now, with the Benn Act’s delayed departure date of 31 January likely to be approved by the European Council, he is calling for an election on 12 December. Parliament will get to vote tomorrow; in the rules laid down by the Fixed-Term Parliaments Act, Johnson requires two-thirds of MPs to support the election.
Between these calls, Johnson has lost a series of votes on measures relating to Brexit. But he has won one—on the second reading of his EU withdrawal agreement—and he is attempting to bind MPs’ wishes for more time to scrutinise it into a vote for the 12 December election. In parliamentary terms, these are not connected and unless Labour supports the motion for an election, it will not happen in December. Labour’s support so far has been on the condition of “no deal” being taken off the table, which hasn’t happened yet despite Benn, despite Johnson having negotiated a deal and despite this deal’s associated Withdrawal Agreement Bill passing its second reading.
It now looks most likely that the European Council will follow the Benn Act’s extension to the end of January but with some kind of mechanism for leaving earlier if the Withdrawal Agreement Bill is passed and the overall deal is approved by parliament. Of course, that comes with many ifs and buts, including the likelihood of a general election at some point before 31 January. Whenever it comes, it is likely that Johnson will hold up his deal as the version of Brexit—or at least of the initial withdrawal—that he would like a parliamentary majority to deliver.
That election will also offer more detail and scrutiny of announcements in the recent Queen’s speech, as well as of the spending commitments set out by Johnson and chancellor Sajid Javid since the summer. We expected more of both in the budget scheduled for 6 November, but that has now been postponed thanks to the parliamentary standoff.
What, then, does all of this mean for higher education and science? First, it means that regulators and funders—and institutions—must still prepare for the possibility of leaving without a deal, even if this now looks highly unlikely to happen on 31 October. As recently reported by Martin McQuillan, the Office for Students considered this at its board meeting on 26 September. Annex A of the meeting report includes an assessment of the impact of a no-deal Brexit, but it has been made exempt from publication on the grounds of “locally sensitive information”.
Self-evidence
But universities and regulators must also plan for the possibility of Johnson’s deal becoming reality, whether before or after an election. As Anton Muscatelli, chair of the Russell Group and principal of the University of Glasgow, has warned, Johnson’s deal “is a very hard Brexit”. Yet according to Javid, it needs no impact assessment as it is “self-evidently” in Britain’s economic interest. For seasoned Treasury watchers, this is a remarkable statement. This is a department that costs and forecasts everything. It would have been impossible to deliver a budget without some Treasury numbers as well as an independent assessment from the Office for Budget Responsibility. On this at least, both Javid and Johnson must be very relieved.
With the Treasury and the Office for Budget Responsibility temporarily silenced, there are at least some former officials offering detailed assessments of both a no-deal Brexit and Johnson’s proposed deal. Jonathan Portes, a former Treasury economist now writing for the UK in a Changing Europe initiative at King’s College London, has attempted to forecast the long-term impact of both. He finds that relative to staying in the European Union, aggregate UK trade would fall by 13 per cent under Johnson’s proposals and by 16 per cent under World Trade Organization (or “no deal”) terms, while income per capita would fall by 6.4 per cent and in the WTO scenario by 8.1 per cent.
According to former Treasury permanent secretary Nick Macpherson in a lecture at King’s last week, “If the government handles Brexit sensibly—and that is a big if—the impact of Brexit is likely to take something like a quarter to a half per cent a year off annual growth in productivity and living standards. That is barely perceptible. But over a 10-to-20-year period, it could have an effect much bigger than any of the crises I have described today.”
Worryingly, Macpherson includes the financial crash in 2007-8 and the 1970s International Monetary Fund crisis in this list. He also points to estimates by Chris Giles of the Financial Times that Brexit has already reduced GDP by 2 to 3 per cent with, by his reckoning, a subsequent loss of revenue to the Treasury of some £20 billion a year. That’s one hell of a big hit to spending.
The estimates in the UK in a Changing Europe report also imply a substantial reduction in funds available for public spending. Its most optimistic scenario suggests that Johnson’s deal would leave the public finances £16bn worse off at current prices. Its pessimistic scenario forecasts a much greater impact of around £49bn.
War chest
As Paul Johnson, another former Treasury economist, recently wrote: “The so-called Brexit war chest, which was only ever the difference between projected borrowing and the maximum borrowing allowable under this rule, has shrunk from a seemingly healthy £27bn back in March to less than zero today.”
So back to Sajid “self evident” Javid and his decision to postpone the budget. He’d already promised a new set of fiscal rules, needed to meet the spending commitments made by Johnson’s government since July. However, the forecasts suggest that he is going to struggle to invent anything that can remain robust and in place for very long—especially when the budget would probably have contained even more election giveaways, including, perhaps, more details on the funds available to the Advanced Research Projects Agency-style funder unveiled in the Queen’s speech.
Without a budget, we remain thin on detail for research spending as well as for the rest of higher education (noting that the budget may also have included some kind of response to Augar). But it is clear that Johnson, his adviser Dominic Cummings and Javid would at least like to spend more on science. They want to spend more on quite a lot of things. So far—at least according to the bits of Theresa May’s deal cut and pasted to the new version—they also want to maintain access to EU funds and programmes.
This has been the objective of higher education and all the science ministers since the referendum. In the debate on the Withdrawal Agreement Bill, former universities minister Jo Johnson asked his brother if he would “work tirelessly to secure the closest possible relationship with European science and research funding programmes”. The prime minister replied that he would and that he would aim to “protect, preserve and enhance it”.
Pink-eyed Terminators
In the mind of Cummings, this might all be possible—but then again so is creating a UK version of Arpa and a research base on the moon. Johnson is likewise optimistic—but he also thinks that UK science will help develop futuristic “hangover cures”, “pink-eyed Terminators”, “terrifying limbless chickens” and household devices that “monitor your nightmares and monitor your fridge”.
I suspect that the majority in our universities are more sceptical about securing a good deal with the EU on continued access to its programmes, as well as about the realities of science and technology or the policies that underpin them.
The pledges for more domestic spending and further progress towards 2.4 per cent and 3 per cent R&D targets also deserve some scepticism. In the short term it may be possible to get away with promising more for science and research—and also for the NHS, for schools and colleges, for the police, for defence, for infrastructure, for farming and fishing, and for “left behind” people and places—but as the likes of Macpherson, Portes and Paul Johnson all show, the economics will catch up in the end.
At some point, the Treasury will have to translate these political promises into cold, hard cash. The prime minister’s list is getting longer by the day but even Father Christmas has fiscal rules. Sooner or later, Javid will have to work out how to pay the bills.
Andrew Westwood is professor of government practice at the University of Manchester.