Looking back on Brexit: are there lessons to learn from the negotiations and the aftermath of that?
Yes – the extent to which you’re dependent on the world economy.
I think what needed to change culturally, within the political class and within officialdom, business, et cetera, is [the understanding of] the extent to which you are taking sovereign control only of your own economy – and therefore you’ve got to be alive to how you manage the international economy. My view was that, having spent so long inside the EU, there was not the acute sensitivity to how you position yourself to deal with the global economy at a government-to-government level.
It wasn’t that that cultural mindset was weak for remainers and strong for Brexiteers – it was pervasive across the whole spectrum. There’s a whole area of decision-making where you haven’t had 20 or 30 years of making existential decisions… so there just wasn’t that habit of decision-making that there had been in some other domains, like defence and security, for instance; to some extent in foreign affairs; and mostly in fiscal matters.
Therefore, everything was de novo, or “why can’t we do this?” [Because] that’s not how it works – but there was no inherited sense of how it works, because there was no history of having done it. And I think there’s still a long way to go to sharpen things up.
Are there lessons the UK can take from New Zealand, where you started your trade career?
I come from a country which is a long way away, which is very small and has no power. But because it had survived on the international market for 30 years, it had a habit of understanding where the strong points and weak points were. Ministers and government had a degree of continuity – they’d seen the movies before. So the decision-making was much more focused: they didn’t consider options as if they were theoretically possible, because they knew they didn’t work. And so, oddly enough, I often found that there was a greater degree of realism at the top bureaucratic level and at the political level in a funny little country at the other end of the world than there was in the heart of a G7 economy – which would probably drive all my civil service colleagues to distraction. It used to drive me to distraction, certainly, [thinking]: “Don’t you get how important this is?”
Do you think we’ve done enough with the opportunities afforded to us by Brexit?
I don’t think so. But, for the reasons I described, it’s probably understandable. And geography is a factor: if you look at the trend line of our exports, they’ve been dropping to the EU for years. They’ve been going to where the growth has been, which is in East Asia and other parts of the world like the Middle East. But that wasn’t really the horizon, generally, that lots of British businesses were used to – so you’ve got to make inroads into those economies. Not that you abandon your traditional trading partners, but: go where the growth is. I think less has been made of that than really should have been.
In recent months, the UK has reached trade agreements with the EU, the US and India. Do you think the civil service has the capacity to negotiate multiple trade deals at once effectively?
I think so. We always managed it, and we had a lot going on at various times. To be doing deals with ASEAN, for example, at the same time as all the others would be a stretch. There would be a resources question.
I could tell you 20 things that are wrong with the Whitehall bureaucracy when it comes to resourcing and all the rest of it for negotiations. But it has worked, and it sort of continues to work. You can always improve things. But we’ve been doing more trade negotiations than anybody else in the world [recently] – so I think we’ve done really very well. I would say that, wouldn’t I? But as far as I can see, I think the show can still be on the road pretty effectively.
Do you have ideas about what needs to change in Whitehall?
Yes, but I don’t think they can be done.
The Australians, the New Zealanders and the Canadians all have a combined foreign-and-trade ministry arrangement. Ideally, I think that makes sense. If you’re going to house a trade negotiating and trade policy function, where does it really belong in the abstract? I’d say the logic of what those three have done makes sense for the modern world.
I just don’t think that’s possible [here], given the state of the FCDO at the moment. It’s one of those things where one of us is driven crazy by an official saying: “I think the best thing that could happen, secretary of state, is that the FCDO and the trade part of DBT should come together. But actually they can’t, so therefore don’t do it.” That’s sort of what I’m saying.
So you wouldn’t be in favour of a machinery of government change?
The sickness inside any organisation, public or private, is [thinking] that somehow structure is the answer to everything. I mean, it’s the answer to some things, but you’d just get driven crazy by the sheer joy that would appear on senior officials’ faces at the prospect of a MoG change. I’d never heard of a MoG change before I got to London, I thought: “What the hell is a MoG change?” It was the only thing I ever saw anybody get excited about.
That’s not the fundamental question. What’s a bit challenging is what I call an additionality, really, of having a more joined-up, strategic view about what the technicalities of the politics are, what the technicalities of the trading arrangements are, together with what the geopolitics of the trading arrangements are now. There, I think, a lot of countries are struggling with having a coherent vision. I think that’s an area where we need to do a wee bit more work. I mean, we had to be resourced up with trade-policy expertise and trade-negotiations expertise [when I arrived at DIT in 2017] because we didn’t have it. Getting that in train was a large chunk of what I had to do when I came here.
I do think it became a bit of a fashion to have second permanent secretaries. When I first arrived here, I think there might have been one or two, and then [suddenly] they were all over the place
What should that joined-up, strategic view look like?
As always, the world evolves and I think what happened with Putin’s invasion of Ukraine, and the way in which the Chinese are operating – the whole economic security side of things starts to become more visibly part and parcel of what your trade policy is. The UK has been very fortunate, because it has people in the deep state who are skilled enough in those areas, and they can transfer those skills into roles, but it’s still a bit challenging to bring those together. We’ve done amazing things in getting that to work well, but I still think we need a more joined-up, coherent view about how our defence and strategic and political imperatives are aligned with our trade policy and trade-negotiating strategies. It’s still a little bit clunky.
I don’t think you need a lot of people; I just think we need to turn our minds to how we can blend those skills. It’s difficult in any system. That’s why the Australians, New Zealanders, Canadians have combined ministries, largely for management reasons – if you’re a small or medium-sized economy running a foreign service, it’s bloody expensive. You can’t afford to have two of them, the overhead is too high. So, therefore, those countries have a cadre of people who’ve developed over 20 years, who’ve worked on both sides of the street – and we don’t. And, of course, we need them now, not 20 years from now. So I think there’s a wee bit of a challenge for how we upskill in that area.
A MoG change involving the FCDO and DBT isn’t the answer, but I think there needs to be a bit more coherence in how you put those together. I’m not convinced that the culture of a business and trade ministry is sufficient to get you those skills. And I’m not convinced that an FCDO – although it has overseas networks and works with DBT – is capable of doing that either. I think you need to have some kind of coherent plan for how you develop those kinds of people – and quickly. I do think that’s something where there’s a bit of unfinished business.
Are you concerned that the government no longer has a UK chief trade negotiation adviser?
Well, there are DGs there – people that worked with me – and I think ministers are in very safe hands. That second permanent secretary and chief trade negotiation adviser role was created because we didn’t have anything before, and we needed to create that function and set the whole system up. So you could argue that ministers felt that was needed at a particular point in time, and now it’s sort of done, you don’t need it any more. And I do think it became a bit of a fashion to have second permanent secretaries. When I first arrived here, I think there might have been one or two, and then [suddenly] they were all over the place. So I’m not so bothered about that.
The only thing I would worry about is that you don’t have an independent trade department and you don’t have a leadership figure at that level on trade, making you more vulnerable to capture by domestic interests. It’s not in itself decisive, but – is it a straw in the wind that things are moving away from prioritising the equal importance of trade to your domestic industry considerations? Are you sure you’ve got enough guard rails to make sure that the risk of capture is being managed? Having said that, even if you had somebody in that role, it doesn’t mean to say you’re still protected from it.
Do you think that “capture” is happening now?
I think that’s the risk. I don’t have any evidence to think anything’s gone off the rails, but those are questions that, I think, are legitimately asked and need to be seriously answered.
There are places where the trade function is nested with the business function, like the Korean model and the Japanese model, to some extent. There’s serious capture in both of those places and in other places where that model exists. DBT is a relatively new department, so I think it’s a bit too early to be smug about whether or not that risk has been avoided.
How do you guard against that?
When I’m talking about the kind of people we need to be training now, that’s for two reasons: one, because we need those people who have got that perspective; and secondly, they need to be a counterbalance to just surrendering to the centre of gravity of a domestic business department. I don’t have anywhere else in mind where you could realistically nest the trade function. So having some additionality for what I’d call the geo-strategic trade issues and function is an added way to strengthen an independent culture, because the trade negotiating and trade policy function is disruptive and is meant to be disruptive. It’s just the way it is, and you won’t do it if your first kneejerk reaction is you don’t want to get phone calls from the CEO of this place and the CEO of that place. If they’re making those calls to another department, that’s fine, but if those decisions have been made by officials and by ministers who’ve got conflicting responsibilities, you run the risk – though I don’t think it’s happening – of losing that outside perspective on what you need to do.
Like when you don’t have a foreign ministry which has a trade function under it – and therefore has credibility around the cabinet table for its views about what you’re doing and what that will mean for your international relationships – then you don’t have the counterweight. So that’s a vulnerability that they need to be very mindful of.
With everything going on with trade right now, do you think it would be a good idea for the government to renew your contract?
Listen, I’ve given various governments seven and a half years of advice. I think they’re entitled to look for that advice from somewhere else.