The largest think tank on the right in the UK has recommended doing away with trade tariffs after Brexit, arguing that this will keep food prices down as Britain leaves Europe.

In a report released on Tuesday, Policy Exchange, which was the favourite think tank of former PM David Cameron, claims that subsidies and high tariffs in place in Europe raise the costs of EU goods and food in relation to world prices. Writing on the Conservative Home blog, the paper’s co-author Warwick Lightfoot said this was the case in the 1960s when the UK first explored applying for membership of the common market and remains so now.

The think tank has suggested in previous reports that, although remaining part of the Single Market and EU Customs Union would present the least disruptive course for Brexit in the short-term, this is not in Britain’s long-term interests. The authors of the paper, Farming Tomorrow, say Brexit represents a “Once in a generation chance” to reform food and environmental policy.

They claim that the EU Common Agricultural Policy (CAP) has, at great expense to the public, reduced agricultural productivity by lessening competition and supporting inefficient farmers, as well as driving up food prices at the checkout. The report highlights ‘perverse’ incentives in the CAP, including keeping land in ‘good Agricultural and Environmental Condition’ - which means free of trees, and the three crop rule - which is expensive, but only applies to a small number of farmers.

Although some of the paper’s recommendations cover ground that has been fairly well-trodden by policy experts and NGOs, many of whom have already produced papers outlining their post-Brexit policy plans, some of Policy Exchange’s recommendations represent a drastic departure from food and environment groups’ advice.

The think tank wants to overhaul agricultural subsidies, so that farm payments reward farmers who deliver public goods like biodiversity and flood prevention, rather than rewarding wealthy landowners; this recommendation has been made by groups ranging from small farmers’ union the Landworkers’ Alliance to major CAP beneficiary and the nation’s second largest landowner the National Trust. However, Policy Exchange also wants to do away with trade tariffs, which Lightfoot and his fellow authors claim “Will unlock new trade deals, help developing countries and deliver cheaper food for consumers,” and in order to support this move, they recommend re-jigging the food safety regime, moving it away from the European system, which is underpinned by the precautionary principle, to one which more closely resembles the American system. 

Tariffs and food standards

Though the think tank calls this approach ‘science-based’, it acknowledges that it would see a shift from a more protective regulatory regime to a system in which public interest groups or scientists would have to provide “evidence of demonstrated harm” before any action could be taken on damaging practices or technologies. The Policy Exchange authors say food and animal welfare standards could be indicated using voluntary labelling under such a system, and food could still be exported to the EU if Australia-style compulsory tracking systems are in place to ensure the standards of foods destined for the mainland.

Commenting on the paper’s release, Policy Exchange’s Director of Research Warwick Lightfoot said, “The primary goal of government intervention in agriculture should be to support public goods, and to preserve high standards for environmental protection, food safety, and animal welfare. But while we are in the EU, 87% of UK farming income comes from subsidies, a perverse and unsustainable state of affairs.

“Leaving the European Union allows us to think again about agricultural policy from first principles. The starting point for policy reform must be the consumer. The EU’s historic reluctance to open up trade in food products has repeatedly stymied trade deals and led to higher prices for consumers and a distorted farming industry. The UK can now lead the world in cutting tariffs and being a champion of free trade in agriculture.”

Think tank’s proposals are ‘ruthless’

Tim Lang, a Professor at London City University’s Centre for Food Policy and lead author of a major report from three of the UK’s leading food and agriculture academics, published two weeks ago by the Science Policy Research Unit at Sussex University, said the Policy Exchange paper outlines “An expected but pretty ruthless neoliberal line on farming and Brexit.”

He referred to the repeal of the Corn Laws, the dismantling of a system set up to benefit the UK’s wealthy landowners which ushered in the country’s early forays into free trade, adding, “This has more than a whiff of 1846 politics: Britain’s power elite wanting cheap food from abroad to keep the masses happy – but ignoring the massive complications we have today from just that over rocketing healthcare and environmental costs. Cheap food got backed legally, but it split the Tory party and marginalised farming till World War 1 reminded Government of its value.”

Reacting to the paper’s recommendations, Professor Lang said, “UK governments of both hues have wanted to get rid of CAP subsidies for a long time. The Treasury and Defra economists under Labour made it clear they wanted rid of subsidies and to do a New Zealand. The current government, like Policy Exchange, proposes retaining something like the Pillar two strand of the CAP [rural development and ecosystems support] but this is only 20% of the budget. And full subsidies are promised only until 2022. That’s a shake of a lamb’s tail.

“The report shares some analysis that could have been lifted from our report, except we interpret things differently. Whereas Policy Exchange seem to ignore this policy direction will result in a collapse of much farming in Britain, we viewed this as a missed opportunity to change what farming and land use are for – to produce health-enhancing food sustainably. Theirs is a very ruthless line of thinking, in my view. The report recommends sourcing cheap food from abroad, which will be the product of cheaper land and labour, and bigger scale systems. This will reduce the cost of labour here and what we will see is a cycle of underinvestment and disinvestment in the food system. This is bad social economics for a country which is only 54% self-sufficient.

"Brexit is highlighting that Farming is a small part of the UK food system, which provides only 8% of the gross value added. This report doesn’t add much to discussion about the whole food system. It’s an out of date, agri-analysis of a what has become a much bigger food system. I hope Mr Gove and Defra are not seduced by this. The public eats food, not farming.”

In the Three Professors report, Prof Lang and his colleagues argue that the UK food system isn’t prepared for Brexit, and that the public have not been made aware of the immense impacts the process will have on the availability, healthiness, price and safety of food in the country. In an article for Open Democracy last week, Professor Lang noted that in terms of the food exchanged between Europe and the UK, health and stability would be put at risk if trade is disrupted; Britain imports fresh fruit and vegetables from the EU whilst exporting processed snacks and alcohol, which, in the professor’s words, doesn’t make for a “great health exchange.”

Noting recent debate in the press following his report, and an apparent Cabinet split over food standards in future trade negotiations, Prof. Lang added, “the public is now starting to wake up to the implications of Brexit for food standards; we can see that from debates over chlorine chicken last week.”

Bring back biodiversity offsetting: other recommendations from Policy Exchange

In addition to its headline proposals, the Policy Exchange paper also recommends ministers look again at biodiversity offsetting, which was a key concept investigated by Defra under former Secretaries Caroline Spelman and Owen Paterson. The policy was apparently kicked into the long grass before the Coalition government gave way to the Conservatives in 2015. The mechanism, which involves replacing any habitats destroyed by developers with 'equivalent' habitats elsewhere, proved hugely controversial; trials in Australia cited by UK government ministers failed to deliver the promised results, and a major UK study of salt marshes concluded that man-made habitats didn’t deliver the biological richness of their natural equivalents. 

Although Policy Exchange authors admitted that the tool is underpinned by “A somewhat simplistic view of the way ecosystems operate,” and that the government’s appetite for offsetting has apparently waned since the days of the first Coalition, they claim that “Biodiversity Offsetting could play an important role in the transition from the current CAP regime to a new policy framework defined around ecosystem services,” potentially providing new streams of income for landowners and former farmers.
 
Reacting to Policy Exchange’s calls for another look at biodiversity offsetting, Dr Andy Lockhart from the Urban Institute at the University of Sheffield said, “There were lots of reasons biodiversity offsetting was abandoned as a national policy in 2014. It's a controversial mechanism with well-documented technical and regulatory challenges, and very few documented successes around the world.

“To be clear, I'm sceptical about offsetting's potential, and the motivations behind it, in most contexts I've come across. But to have any chance of making these kind of market-based instruments operate, it's well-recognised you need robust and unambiguous regulations, and well-resourced local planning authorities willing to impose and enforce conditions on developers. To be ecologically viable, those conditions are going to have to be restrictive and punitive too. This is totally at odds with the 'growth at all costs' approach the Cameron government took, which had the overriding aim of accelerating development, based on the dubious claim that housing and infrastructure projects were being blocked or held up by environmental legislation.”

Dr Lockhart added, “I don't think this government's attitude is markedly different, and if anything, with developers licking their lips at the prospect of dismantling European environmental laws after Brexit, I think the chances of squaring that circle are becoming even more remote.”

The full paper can be read here. Other recommendations made include beefing up industrial strategy to better serve agriculture, with some of the spend on agricultural subsidies being redirected towards rural infrastructure, connectivity and agricultural R&D, and giving the Food Safety Agency new powers to collate, commission, and review scientific evidence on food safety and animal welfare.