The British Model

What is Labour’s “British Model” Brexit

Looking at the Conservative alternatives, we need one fast.

In response to Jo Johnson’s resignation from the government, Jeremy Corbyn was asked whether he supported Johnson’s call for a second referendum on Brexit. After stating that he didn’t think he could, the Labour leader re-emphasised his belief that the Britain had to move on from the referendum result. “The issue now has to be how we bring people together, bring people together around the principles of our economy, our rights and that we don’t turn this country into some kind of offshore tax haven on the lines that Donald Trump might want us to”.

With less than six months to go before the United Kingdom is scheduled to leave the European Union, Corbyn’s statement is alarming not because he ruled out a second referendum, but because we still don’t really know what Labour’s model for Brexit would be. The problem is, with May’s deal a bust and Corbyn’s an illusion, the next most likely option appears to be the one Corbyn seeks to fight and Johnson dismissed: the Brexiteer vision of a low-tax, pro-business, Singapore-style economy on ‘the edge’ of Europe.

The “Singapore model” is tantalising to Brexiteers, because on the surface it vindicates Conservative free-market creed. Owen Paterson, the former environment secretary, was far from alone when he stated in November 2017 that the post-Brexit model should “exactly be Singapore, a tiny country devoid of natural resources but with a booming economy and an average life expectancy of 85…low-tax, low-spend, low-regulation.” At the start of this year, JP Floru, who stood for the Tories in Bermondsey and Old Southwark in 2015, wrote for Conservative Home that by adopting a Singapore model, Britain could “undercut the world”.

Worryingly, the younger Johnson’s statement is one of the few admissions by a senior Conservative that the Singapore model is unworkable for Britain. There’s also another problem: even Singapore’s Prime Minister doesn’t think it’s workable.

This very point was made the day after Johnson’s resignation by their prime minister, Lee Hsien Loong. “I don’t think you can take one society’s solution and just plonk it on a different society…Britain has developed a system of state welfare, of government role in the system where the government accounts for 40 to 45 percent of the GDP,” he said in an interview with Bloomberg. “The Singapore government accounts for 16 percent of the GDP, maybe 17 percent. So to say that you’re going to be like Singapore, are you going to give up two-thirds of your government spending, state pensions and national health?”

The two nations occupy hugely different positions on the world stage. Mirroring the likelihood that a Conservative Brexitwould further restrict immigration numbers, recent curbs on foreign labour in Singapore have led to price increases. And though commentators have noted that Singapore has generous public housing schemes that deliver high-quality accommodation to the majority of its citizens, there is no real welfare state to speak of.

More than anything else, it is the fact that Singapore has no hinterland (it is a city state) that makes it an inappropriate model for Britain. In Singapore, the entire population, regardless of income, is located around the economic and commercial centre. Different social classes are forced by geography to mingle. Even so, inequality is still rising. The United Kingdom is a much larger country with a far more dispersed population from the capital. Any attempt to apply the Singapore model to the UK would see investment and economic activity becoming further concentrated in London, with the rest of the country being neglected. Levels of inequality outside of the South gave rise to the economic and social stagnation of Northern cities, one of the key drivers behind the Brexit vote. A report released last week by Irwin Mitchell and the Centre for Economics and Business Research, has suggested that cities in commutable distance to London will experience stronger growth than cities in the North.

A less frequently suggested alternative is the “Hong Kong” model. Neil Monnery, author of the prize-winning Architect of Prosperity: Sir John Cowperthwaite and the Making of Hong Kong, has suggested that Britain should emulate the economic powerhouse once described as “the barren island”. A variation on this idea has been proposed by Charles Tannock, a Conservative MEP for London, who recently suggested that a Hong Kong in Ireland was the answer to the Irish border issues, “one country with two systems”. Northern Irish businessperson and ex-politician Tina McKenzie suggested in the Daily Mail that Belfast could become a “Freeport of the western hemisphere”.

Though on the surface, the idea of ‘one country with two systems’ sounds attractive to those desperately attempting to find a compromise over Northern Ireland, emulating Hong Kong, is no more appropriate for Britain than Singapore. Since being returned to China in 1997, Hong Kong has become increasingly connected to the mainland as part of the Guangdong-Hong Kong-Macao Greater Bay Area, which packs a population of over 30 million people into an area 1/6ththe size of Great Britain, and beyond that the rest of China. Three immediate problems emerge: 1) Building a Belfast Freeport to challenge Amsterdam would require billions of investment that seem unlikely from a government wedded to a low-tax low-spend mantra. 2) Would the DUP allow such a system to come into place? 3) Hong Kong, like Singapore, has significant underspend in relation to Britain on welfare.

We could pursue these options: but every hint indicates they would lead to much the same economic suffering that drove the Brexit vote in the first place. And with both the Hong Kong and Singapore options looming large as threats, that means we need an alternative from Labour. Does it mean a return to the economic models of the late 1970s when Labour aimed to build an alternative economic strategy? The leadership may feel that, while the party is out of power, it need not decide.But if the Conservatives are left to make the substantive decisions about Britain’s future unimpeded, then we may end up with an attempt to emulate two systems that are wholly incompatible with the needs of British citizens. We need a “British Model.” And we need it fast.