Manufacturing: 700 new laws needed for No Deal Brexit or ‘lights go off’

Some 700 laws need to change to do a No Deal Brexit otherwise “the lights go off,” the head of a UK manufacturing body told an audience in Sheffield.

Tuesday, 25th June 2019, 12:37 pm
Stephen Phipson, chief executive of Make UK

But there were just six weeks left to get them through Parliament.

Stephen Phipson, chief executive of Make UK, said the likelihood was that the new Prime Minister would ask the EU for an extension to the October 31 deadline to agree a deal.

Stephen Phipson, chief executive of Make UK, addresses members in Sheffield.

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And that would probably trigger a no confidence vote in Parliament and a general election.

Mr Phipson told Sheffield members Make UK’s message to ministers was that “No Deal does not work.”

Prime ministerial contender Boris Johnson has said the UK will leave the EU on Halloween come what may, while rival Jeremy Hunt has said a short extension might be necessary to agree a deal. The EU has said the Withdrawal Agreement will not be renegotiated. The economic impact of No Deal could shrink the economy by eight per cent over the next 15 years, according to the Treasury. 

Make UK, formerly EEF, is apolitical Mr Phipson said.

He added: “We need two-to-three years to adapt, that’s much more sensible than a hard stop.

“Manufactured goods comprise 45 per cent of total exports, of which more than 50 per cent go to Europe. We have been integrating supply chains for 45 years and in some sectors, such as automotive, we are very good at it. Jaguar in Coventry receives 1,600 trucks a day, mostly from Europe. The UK content in mass produced cars is just 26 per cent. We can’t onshore that work, we just don’t have those skills any more.

“We tend to use the products that other countries are good at making. That kind of sorting out has been going on for at least 40 years and it is based on frictionless trade at borders.

“Sixty six per cent of members would rather there wasn’t Brexit at all.”

Mr Phipson went on to outline some consequences of No Deal.

Just 12 of more than 40 EU trade agreements have been rolled over so far. And the Swiss deal was on worse terms, which was “not a good sign.” 

Directors of European companies have to be EU nationals. But 98 per cent of British subsidiaries operating in Europe had Brit directors, which would not be allowed post-Brexit.

And it was unclear how much intellectual copyright protection UK companies would have.

He added: “Government is clearly not ready. The new PM will ramp up phase two No Deal planning very quickly, including the military in contingency planning and using warehouses for medicines.

“The new PM will go to Europe to renegotiate, probably in September, and be rebuffed. He’ll then face a difficult choice. About 700 laws in our country need to change to do No Deal, otherwise the lights go off.

“The likelihood is an extension, the Europeans’ drop dead date is March when budgets are fixed in law. But asking for an extension will probably trigger a vote of no confidence and a general election.”

Make UK, which represents 2.7m workers, is one of five national business bodies - including the CBI, IoD, FSB, and British Chambers - that have weekly meetings with Business Secretary Greg Clark. They meet the Prime Minister every other Monday and the Chancellor monthly, Mr Phipson said.

Skills were top of Make UK’s agenda, followed by the Industrial Strategy which has £450m for manufacturing through a sector deal called Made Smarter. Brexit was third.

Mr Phipson also gave an update on British Steel in Scunthorpe, which is seeking a buyer after collapsing last month. Some 4,500 jobs are at risk. The Insolvency Service, which is funding British Steel’s operations while seeking a buyer, has given bidders until June 30 to make an offer. 

British Steel was loaded with debt by its private equity owners and buyers had been scared off by a 25 per cent tariff on prices above a certain quota in the event of No Deal.

But it was the only steel mill in the world that could make 100m rails, prized by the Germans and French.

He added: “The Government has learned lessons from SSI Redcar. It is thinking about nationalising it.”