Brexit-related news have become a bit more central again in the past week, as the world is getting used to the new reality that there is an ongoing – and possibly long-lasting – war in Europe. Thus, the Northern Ireland Protocol (NIP) was in the news once again with the NI Court of Appeal confirming that the NIP is lawful, while David Frost gave a speech in Zurich largely repeating his distorted views of Brexit, and levelling up is back in the news as well as the launch of the Shared Prosperity Fund (UKSPF) is fast approaching, without any details publicised yet.
But Brexit is also back in the news because of the Prime Minister’s shocking claim – made seemingly in all seriousness, publicly, and with the Ukrainian Ambassador sitting in the front row – that Ukrainians fighting for their lives against a foreign military attack could be compared to Brits voting for Brexit. No reasonable person will need much explanation why that comparison is crass, disgusting, and utterly absurd. Anna Damski put it most concisely perhaps by pointing out that “[t]he contrast between our country and [Ukraine] couldn’t be more stark: they are willing to fight for their lives to get what we have just walked away from.” Indeed, how thoroughly Johnson and other Brexiters misunderstand the concept of sovereignty and its relationship to EU membership, is illustrated by the fact that Ukraine has applied for EU membership to protect its national sovereignty from a real attack, whereas the UK left the EU to protect at false conception of sovereignty from an imagined threat. (A nice way of illustrating that Brexiters do not understand the concept of sovereignty came from Paul Embrey – a left-wing Brexiter (Lexiter) and trade unionist – who suggested in a Tweet that the EU’s 160 sanctioned individuals amounted to only 6 per EU member state (160/27 = 5.92). This reflects Brexiters’ worldview where everything is a zero-sum game and the whole is never more than the sum of its parts. If we leave intellectual standards to one side for a minute and engage in such silly math exercises, then we should rather conclude that thanks to the EU the 160 individuals face sanctions in 27 different countries, meaning 4320 sanctions have been put in place. Pooling sovereignty leads to a multiplier effect that Brexiters simply do not seem to grasp).
Regardless, Johnson’s comment may just have been another example of him unthinkingly following his instinct to provoke and shock and to distinguish himself by saying things no other politician would dare to say out loud. But in a sign confirming the thesis that Johnson is not the cause, but the symptom of a more profound transformation of British conservatism, Home Secretary Priti Patel made equally crass comments at the same Conservative spring conference. She desperately tried to construe a case for being tough on Ukrainian refugees (mostly women and children), by suggesting that it was “naïve and misguided to think that only men can be covert operatives or that refugee flows would not be subjected to some form of exploitation.” These remarks are utterly cynical (justifying her politically-motivated approach to refugees with fake security arguments) and highly implausible (what exactly would Putin hope to achieve with fake refugees as agents when people close to him have been successfully infiltrating the highest echelons of British politics for decades?). Worse still, her insisting that the government would “closely follow the advice of our intelligence and security services,” sounds like a slap in the face of those who have paid a high price for warning – to no avail – against the risks that come with the Tory party opening its arms to Russians (most importantly perhaps Carole Cadwalladr) and those who lost their lives arguably due to the UK government’s lax attitude towards Russian interference. In other words, for the past decades the Tories have put their political and personal interests before national security by cosying up to rich and powerful Russians; but when it comes to helping the needy and weak, they turn on those who advocate for humanity in the name of national security. To some extent, the Johnson government’s verbal excesses show one thing, namely that Brexit may stop working for them.
Brexit stops working…what now for the Brexiters?
The question whether actual existing Brexit is working continues to divide the country between ‘Leavers’ and ‘Remainers.’ The question whether it could be made to work divides Remainers. The question whether it has worked for Brexiters, however, had a clear answer until recently: It had worked exceptionally well. Brexit had allowed them to capture one of the UK’s two main parties, obtain control over the government, and implement their political agenda. Yet, recent weeks have provided evidence that it may have stopped working as a tool to conquer power.
There were strong reactions against Johnson’s Brexit-Ukraine comparison beyond national borders. Former Swedish PM Carl Bildt suggested Johnson should be made an international pariah and French MEP Nathalie Loiseau reminded the PM that ‘words have meaning.’ The fact that members of the UK government need reminding of that illustrates the increasing gulf that separates people inside the Brexiter bubble from the real world, which like I wrote last week, increasingly seems like a form of mass psychosis. One example of this came this week in an Express article that claimed to quote an EU diplomat who, according to the paper, admitted that ‘Brexit Britain “made the difference” in Ukraine's war.’ The statements quoted in the article read like verbatim quotes from the standard Brexiter playbook, including all the standard tropes about nimbleness etc. It seems highly unlikely that a real-world EU diplomat would have made such comments, simply because no one with any expertise on diplomacy or any understanding of what has happened since Russia invaded Ukraine would believe what the article claims. The most likely explanation is that as reality moves further away from Brexiter fantasies, the only option they have left to defend Brexit is making things up out of thin air.
We therefore seem to move towards another watershed moment in post-Brexit UK politics: Now that ‘Brexit is done’ but its payoffs are so elusive that they cannot form the basis for a successful General Election campaign, Brexiters are torn between dropping a powerful device for dividing the nation and thus securing their power and engaging in ever new levels of fantasies, lies, and contortions to make believe Brexit is working or can be made to work. Indeed, Brexiters seem to be hesitating between trying to revive the division between ‘Leave’ and ‘Remain’ in order to shore up support from Eurosceptics in the context of a drop in Leave voter support for the Conservative party (which is how the UK in a Changing Europe’s Alan Wager interpreted Johnson’s vile comparison) and ditching any reference to it in an effort to avoid taking any blame for the way it is playing out (which is Chris Grey’s thesis of the cancelling of Brexit).
The continuing evolution and transformation of the Brexit project and how political actors use it makes it difficult to fully grasp it and creates a danger for anti-Brexiters to get dragged into Brexiter-style confusions. The mass layoffs at ferry operator P&O Ferries this week are a case in point.
P&O Ferries’ mass layoffs – A Brexit effect?
The case of P&O Ferries is shocking not only because of the ruthlessness of laying off 800 members of staff in the UK to replace them with cheaper agency workers, but also because of the disturbing disregard for employees revealed by the way the mass layoffs were communicated (via pre-recorded video message) and by the use of private security firms to remove the crews from the ships.
While some commentators were quick to see the sacking as a result of Brexit, others have urged caution when drawing any direct links to Brexit. The anti-Brexit narrative suggested that the sacking was made possible by Brexit, as it allegedly led to lowering of employment protection laws. That is a false claim. None of the relevant employment protection laws have changed since Brexit. Similarly, the suggestion that under EU law mass redundancies would have been banned is incorrect and the relevant EU law as incorporated in UK legislation has not been repealed anyway. There is a debate over discriminatory treatment of UK(-based) workers compared to workers in other EU countries, which could have led to problems for P&O if the UK were still an EU member state (e.g. see this thread), but generally speaking EU membership would hardly have prevented these layoffs from happening.
That is because the EU’s legislation in terms of employment protection laws is not particularly generous towards employees. Thus, regarding posted workers (i.e. workers sent by a company registered in one EU member state to work in another), the EU has privileged free movement of people over the protection of local social-, environmental-, and welfare standards. Thus, the European Court of Justice’s landmark Laval and Viking rulings have meant that companies’ liberty under the principle of free movement of people are valued higher than trade unions’ right to take industrial action in defence of local workers and their working conditions when faced with competition from countries with lower wage levels and social standards. From this perspective, P&O’s actions do not seem contrary to the spirit of EU rules in this area – although whether they would have broken any specific rules in the way the layoffs were carried out is another question. The point is, EU legislation is not particularly protective of workers. That makes it even more important that national laws are. Indeed, within the overarching EU labour law framework, local laws play a role in either reinforcing or dampening the impact of EU market integration on domestic workers in particular regarding their exposure to competition from lower-wage EU member states. For instance, investment in workers’ skills and productivity through training, as well as compensating through retraining and welfare payments can reduce the impact of within-EU competition. In all these areas, the UK consistently chose the low road, exposing workers completely to international competition rather than protecting them from it. In short, the EU is neither completely innocent in putting in place a labour relations regime that made P&O’s actions possible, nor is it fully to blame for it. Consequently, for now, Brexit has not changed much the situation in this respect.
Did Brexit play an economic – as opposed to legal – role in P&O’s decision to reduce the wage bill by hiring cheaper workers? Namely, did the decline in cross-channel trade reduce the companies’ profitability making this move inevitable? These questions are hard to answer at the moment, as the most recent financial reports available only cover the year up to 31.12.2020, i.e. before the end of the transition period. The P&O Ferries’ 2020 financial report acknowledges that ‘some friction in trade has occurred’ as a result of Brexit (p.5) and it presents a “sever but plausible downside scenario [that] also forecasts lower volumes of freight given the general uncertainties of the current environment and potential effects of further changes to the implementation of trade regulations” (p.4). So, for now it is impossible to tell for sure whether Brexit has contributed to the considerable losses P&O has incurred over the past two years. Yet, given that trade in goods between the UK and the EU has further declined since the end of the transition period it is plausible that it did.
Brexit betrayals
While Brexit was neither legally nor economically necessary or sufficient for the layoffs to happen, what is undeniable is that they constitute one of the strongest illustrations to date that Brexiters are betraying the promises they have made to the British public. As such, it starts having political consequences for Brexiters. The case constitutes a test for the strategy to unit ‘comfortable leavers’ in the so-called Blue Wall and former labour voting ‘red-wall conservatives’ by promising the latter better jobs, better working conditions, better living standards, while promising the proverbial retired investment banker, stock broker, or fund manager in the Blue Wall freedom from state interference, taxation, and public accountability (see Time Bale’s contribution to the UK in a Changing Europe report on post-Brexit politics). Delivering on both always seemed like wishful thinking at best, outright lying to the public at worst. But as reality continues to bite, the balancing act becomes increasingly difficult . This was most strikingly illustrated this week by Nathalie Elphicke conservative MP for Dover who tried to capitalise on the outrage against P&O by promising to defend workers’ rights, but was heckled by people in the street for her voting record in Parliament, most notably her failure to support a bill on fire and re-hire practices.
Similar contortions came from Business Secretary Kwasi Kwarteng who tweeted a letter he wrote to Peter Hebblethwaite - CEO of P&O Ferries – that said ‘[i]t cannot be right that the company feels tied closely enough to he UK to receive significant amounts of taxpayer money but does not appear willing to abide by the rules that we have put in place to protect British workers.’ Whether or not P&O did abide by the rules is unclear at this stage, but what is clear is that Kwarteng seems like the last person who should be outraged by the sackings. Afterall, these ruthless actions seem very much in line with what Kwarteng and other senior figures in Johnson’s government seem to advocate in their libertarian pamphlet ‘Britannia Unchained.’ Despite the outrage, people in government clearly still adhere to the latter libertarian views. This is supported by a leaked Whitehall memo about P&O’s planned redundancies – that clearly the government was made aware of beforehand – which seems to justify P&O’s plan with the usual libertarian arguments that they were inevitable to save the company from bankruptcy and would make the company more efficient – never mind the workers who lost their jobs.
Thus, rather than genuine concern about workers, Tories’ outrage about the sackings seems to reflect the inherent contradiction in the Brexit strategy of promising deregulation and unfettered markets at the same time as a high-skill, high-wage, high-productivity post-Brexit economic model.
The P&O case should also put to rest once and for all the Lexiter case for leaving the EU. The dark irony is that the RMT union urged its members to vote for Brexit to improve worker protections, when in the P&O Ferries case only UK-based workers were fired, while French and Dutch workers were not affected – possibly due to more restrictive labour regulations.
P&O Ferries and the causes of Brexit: Smoke and mirrors
While not a result of Brexit, it is still worth closely looking at P&O Ferries case, because at one level it is clearly linked to Brexit. Namely, the company illustrates to perfection everything that is wrong with recent developments in modern capitalism, which in turn I would argue are the root cause of Brexit. These developments concern the companies legal and ownership structures and its shareholder orientation among other things.
P&O’s legal structure is complex. The main entity in the UK is P&O Ferries Division Holdings ltd., which is a holding company incorporated in Great Britain that according to its 2020 annual report (pp.50ff) owns 47 subsidiaries. The subsidiaries included P&O Ferries Holdings, Ltd P&O Ferries Ltd both incorporated in Great Britain and P&O Ship Management Holdings (Jersey) Ltd, incorporated in Jersey, alongside other subsidiaries incorporated in Northern Ireland, Spain, the Netherlands, France, Belgium, Cyprus, and the Bahamas. This structure allows the company to adopt an offshore employment model whereby workers are employed in constituencies where employment protections are lower. This allows the company to react quickly to market downturns by reducing its wage costs through layoffs, which P&O has done not only this week, but already in 2020 when 1100 employees lost their jobs.
This strategy is arguably related to another feature of the company, namely its ownership structure. While P&O Division Holdings Ltd holds 100% of shares in its subsidiaries, it is in turn owned by DP World, a company from Dubai linked to Dubai’s state and royal family specialised in the ownership of ports. DP World bought P&O back in 2006, but sold it to Dubai World Corporation – a Dubai government controlled investment company – a few years later to then buy it back in 2019. At the time, DP World’s CEO Sultan Ahmed bin Sulayem stated: “We look forward to P&O Ferries contributing to driving shareholder value in the coming years.” That statement is significant, because it reveals the fundamental goal of P&O’s ultimate controller, namely making money for DP World’s shareholders. That shareholder orientation has been criticised this week, because PD World paid its shareholders a dividend of £270m in 2020; the same year that P&O received at least £10m in furlough money and applied (unsuccessfully) for a £250m government bailout from the UK government. There are now claims for the furlough money to be clawed back, but it would seem the prospects of that happening are slim. The company also seems to put its shareholders’ interests above the customers’ interests who are facing disruptions for up to 10 days. Clearly, for P&O and its parent DP World creating wealth for shareholders seems the top priority. As such, it is a typical case of current day financialised capitalism.
The complex legal and economic structure creates a system of smoke and mirrors that makes it difficult to assess to what extent there is indeed an economic case for the layoffs – in the sense that they were necessary to save the company from bankruptcy – and whether the way they were carried out broke any relevant laws or not. The opacity is not a coincidence, but a conscious strategy used by rent-seekers to create an impenetrable fog of legal and economic entities that makes it difficult to trace the ultimate controlling parties behind these entities and makes it all but impossible to hold them to account. In the P&O case the confusion created by this system is illustrated by the fact that even the people writing the annual report seem to be confused (P&O Ferries’ 2020 financial report mentioning both Duabi World Corporation and DP World as ultimate controlling party) and both the UK Transport Secretary and Business Secretary initially sent letters asking P&O for clarification about the layoffs to the wrong person.
If there is anything good coming out from the P&O case, it is that it should make it clear who really is to blame for declining living standards, stagnating real wages, and an insecure future. Rather than blaming the agency workers from Eastern Europe for taking British jobs, the attention should turn to those who are spinning the impenetrable web of corporations spanning the globe and who decide who gets to keep and who to lose their jobs. P&O has made it clear that the EU was neither the only reason for the negative impact of free movement on parts of the UK labour market, nor was leaving it the solution to it. Instead, the extent to which EU market integration has affected UK workers was very much the result of UK government’s domestic policy choices. While the EU does influence to some extent what member states can do to protect domestic workers, the simple fact is that successive UK governments simply were not interested in protecting UK workers in the first place. This led to a situation where the UK opened up to world markets without putting in place the necessary safeguards in terms of social welfare spending and labour protections. Paradoxically, the negative impact this approach to globalisation has had on UK workers, led them to vote for Brexit, which – as we now find out – makes things worse rather than better for them.
Hard choices
As reality continues to stubbornly resits Brexit promises, Brexiters face hard choices between performing ever more outlandish contortions to try and claim it is still relevant, trying to ignore it, or jumping ship before it is too late. Arch-Brexiter Ben Habib seems to have chosen the latter, announcing this week in an Express piece that Johnson’s Brexit deal “only delivered monumental constitutional self-harm.” That is an accurate assessment and means Habib is moving somewhat closer to reality. We can hope that in a next step he will come to the insight that any hard version of Brexit will always deliver just that. When he does and others follow, perhaps, time will be ripe for a relationship with the EU that does not inflict maximum damage on the UK. Yet, it may still be some time before that happens. Until then people in the UK will have to brace for more shock announcements, because as the Home Secretary’s reminded us this week: “A very small number of people can wreak utter havoc.” The UK government is proving on a daily basis that she is definitely right on that one!