The dictionary definition of governance is the process of decision-making and the process by which decisions are implemented. Government is one of the key actors in this area because it sets the institutional framework against which decisions are taken. The United Nations defines eight key characteristics of good governance: It is (i) participatory; (ii) consensus oriented; (iii) accountable; (iv) transparent; (v) responsive; (vi) effective; (vii) efficient and (viii) equitable. In addition, it should be ”inclusive and follow the rule of law [thus ensuring] that corruption is minimized and that the views of minorities are taken into account and that the voices of the most vulnerable in society are heard in decision-making. It is also responsive to the present and future needs of society.”
Measured in terms of these criteria, the post-Brexit decision-making process fails on a number of counts. Arguably the post-referendum process fails on the consensus criterion (i), although Brexit supporters will argue that the referendum was the greatest act of participation in British democratic history outside of an election. But there can be no doubt that the pre- and post-referendum process was not consensus oriented (ii). Unless the government puts the terms of its deal to the electorate, there is a case for suggesting that the accountability principle (iii) is also not satisfied – recall that the electorate did not express a view on the nature of Brexit. I would argue that the process also fails on point (vi) – such has been the inability of the government to make a case that will satisfy all parties, that it is clearly not effective. And it clearly was not efficient (vii) because the process has absorbed so much legislative time that the government has not had time to devote to other pressing policy areas.
On the plus side, the process does satisfy the transparency criterion (iv) though only because the courts forced the government to cede parliament a role in determining the course of Brexit. Whether the other points will ultimately be satisfied, only time will tell. But given the fact that younger voters voted heavily in favour of remaining in the EU, it is clear that “the future needs of society” have not been taken into account.
All these things matter because the UK’s view of itself is bound up with its reputation for stability. Italy has had 65 governments since 1946; the French political system was reconstituted as recently as 1958 whilst the Federal Republic of Germany is only 70 years old. Britain prides itself on its parliamentary democracy which has remained substantially unchanged over 300 years and whose direct roots can be traced back to the 13th century. It was supposed to be unthinkable that a Greek-style crisis of governance could ever happen in the UK. But it has. This does not mean that the UK is immediately about to fall apart at the seams (though it sometimes feels like it). But there are likely to be longer term consequences which will act to its disadvantage.
For one thing, the UK’s reputation as a business-friendly environment has been badly damaged. One thousand days after the referendum and with just nine days to go until EU membership is due to lapse, businesses have no idea about the nature of future trading arrangements with the EU. As a result of this mounting uncertainty, businesses have cut back on investment. We do not need to rake over the coals of what is happening in the car industry but Japanese manufacturers did warn in 2016 that they set up shop in the UK in the 1980s to ensure access to the EU, and that an abrupt departure would have ramifications for their future business decisions.
Financial institutions which are already suffering from low interest rates, an inflated cost base and ever more stringent regulation, could not afford to wait around for governments to decide on the nature of the financial passporting regime and have been planning for more than two years how to secure business continuity. Around 7,000 jobs and £800 bn in assets (10% of total UK bank assets) have moved out of London to other European financial centres. It is highly unlikely that they will come back. And I have long expressed concerns that business that might otherwise have come to London will bypass it altogether. There are indeed indications that firms are opening their first European offices in the EU rather than the UK (Kroll Bond Rating Agency and Norinchukin Bank to name but two).
The nature of the UK could itself be subject to change in future. Scottish voters predominantly rejected Brexit, as indeed did Northern Irish voters. The SNP’s raison d’etre is to push for Scottish independence from the rest of the UK and I have long believed that 10-15 years after the first independence referendum, which took place in 2014, there would be a push for a rerun. I stand by that view, particularly if Scotland is dragged out of the EU against its will. The question of whether Northern Ireland will remain part of the union in the longer term is also relevant. The DUP, which has played such a big role in the Brexit drama, gained only 36% of the vote at the general election two years ago and the vote share of pro-Union parties was only narrowly ahead of nationalist parties which would support a united Ireland. Many Irish commentators believe that a united Ireland is inevitable in the long-run – they may well be right.
Many of these issues could have been avoided if the Brexit process had not descended into factionalism which prevented pragmatic decisions from being taken quickly. With the executive and legislative arms of government at loggerheads, the question has naturally arisen as to whether the system of government is broken. But it is not the institution of government which is the problem. It is those who are managing the process. Only today we have had the Leader of the Opposition walk out of a meeting of party leaders because of differences of opinion with other participants whilst the Prime Minister blames parliament for the UK's current predicament. This is not the behaviour of political leaders.
For a medium-sized country such as the UK to have held a prominent position on the world stage long after its military and financial clout have been diminished speaks volumes for its judicious application of soft power. But as one Italian journalist said to me recently, “I used to look up to the Anglo Saxon system of government compared to my own. Now I no longer do.” The damage caused to the UK’s international may not easily be repaired – if indeed it is repairable at all.
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