Following the UK’s historic decision to leave the EU – with Leave taking 52% of the vote to Remain’s 48% – we look at the next steps for Brexit and the implications for horticulture.
In a referendum that saw record turnout, Leave triumphed with a surprise victory of 52% of the vote. Every region of England, except London, voted in favour of Leave as did Wales, whilst London, Scotland and Northern Ireland all voted strongly in favour of Remain. The result has already had swift and dramatic consequences for both the UK economy and the political landscape.
As the reality of Brexit is beginning to hit home in both Westminster and Brussels, the only thing that is certain is that we can expect a lengthy period of uncertainty and upheaval as the future of the UK’s relationship with the EU, and the rest of the world, starts to take shape.
Where are we right now?
This political upheaval presents a once in a lifetime opportunity for the horticulture sector to shape the policy agenda and to make progress on issues in the light of new personalities and priorities. For example, the HTA is lobbying for senior representation for ornamental horticulture in the new government structure.
Britain’s exit from the EU will be a lengthy process and the best advice is to take time to assess the opportunities and threats for your organisation and to understand what your priorities are for the future of the UK-EU relationship.
There are many policy areas cutting across different government departments and we have used the results of our consultation to ascertain what your priority areas are. These have formed our lobbying strategy for ornamental horticulture.
Business will need to assess which elements of EU legislation they wish to retain and where they would like to see changes. The HTA will ensure the voice of the horticulture sector is heard loud and clear in this process.
What is at stake for the horticulture sector?
- HTA estimates that among its commercial grower members up to a third of the workforce is made up of non-UK, EU nationals. EU nationals are heavily represented in the seasonal workforce.
- At present many employers within the sector take advantage of freedom of movement – which allows any EU citizen to live and work freely across the EU – by employing staff from across the European Union, as either full time or seasonal workers.
- This means the industry accesses a wider talent pool enabling it to recruit the brightest and the best from across the EU (at a time when horticultural skills are in short supply and diminishing in the UK). Brexit means accessing this talent could be much harder in the future and also puts into question the future of those EU migrants already here, meaning that the sector may need to look to alternative arrangements to fill vacancies.
- George Eustice MP, Minister of State for Defra has suggested that the UK could return to using seasonal agricultural workers schemes or other similar arrangements to solve the skills shortage this may create, but this would require legislation.
- The fall in the value of sterling in the aftermath of the referendum has already had a detrimental impact on many operators in the sector who import plants and products – this will inevitably have a knock-on effect on prices for the customer.
- Over a third of a billion pounds worth of plants and plant material is imported into the UK annually by businesses across the horticulture industry. This represents a strong opportunity for economic growth through import substitution.
- The Prime Minister has confirmed that the UK government will no longer seek membership of the Single Market which could mean that many horticulture businesses who currently trade with Europe could suffer from the imposition of restrictive and costly tariffs.
- Examples of where this could have particular impact include the common seed market, which allows free movement of seeds, and has seen extensive harmonisation of technical requirements across member states; or the ability to trade plant material, equipment and finished plants freely.
Plant health and environment regulation
As it stands, the UK abides by a number of EU council directives designed to protect the environment and curb the spread of harmful pests and diseases. Whilst it is unlikely the rule book will be completely re-written once the UK is no longer part of the EU, not least due to international commitments (such as the International Plant Protection Convention) there is likely to be a lengthy debate on the merits of regulations as the UK decides which aspects of EU law it upholds and which it re-writes.
Depending on the regulation or directive this could be beneficial or potentially damaging to the sector, re-opening issues such as the appropriate use of neonicotinoids.
Given the level of interdependence between horticulture industries across the EU and shared challenges around biosecurity, plant health and innovation and skills, the sector will need to ensure that government maintains a collaborative and joined-up approach with other member states even in the aftermath of Brexit.
Brexit also means that decisions at the EU level may be delayed. We have already seen the decision on whether to relicense the use of glyphosate having been put on hold, as the EU focuses on negotiating the UK’s departure as a matter of urgency.
The UK is a net importer of plants, bringing in more than a third of a billion pounds worth of plants every year. This represents a significant pest and disease risk, as well as the economic growth opportunity mentioned above.
These are initial thoughts on some of the key policy areas where it is critical that ornamental horticulture is considered alongside agriculture and forestry. During the next few years we may see a complete re-shaping of our regulatory environment. Now is the time for us to prepare our arguments, gather our statistics and case studies as evidence, and lobby for positive change.
What are the wider implications?
Political implications in Westminster
The UK’s decision to leave the EU provoked a period of political turmoil, culminating in the appointment of a new Prime Minister, Rt Hon Theresa May. The subsequent reshuffle saw significant changes to the ministerial team in all government departments including the Department for Environment, Food and Rural Affairs (Defra) and the creation of a single Department covering business issues, energy and climate change – the Department for Business, Energy and Industrial Strategy.
Jeremy Corbyn faced a challenge from the Parliamentary Labour Party in the Summer following the resignation of the majority of his Shadow Cabinet and a vote of no confidence. Despite widespread opposition to Mr Corbyn’s leadership the attempts to remove him were thwarted when he won a leadership contest against Owen Smith MP with an increased share of the vote from the party membership.
Implications for the Union
Turning to Scotland, First Minister Nicola Sturgeon has made it clear that given the outcome of the referendum and the overwhelming support for Remain north of the border, “a second Scottish independence referendum must be on the table, and is on the table”. She argued that it would be “democratically unacceptable” for Scotland to be taken out of the EU against the wishes of the people. All parties in Scotland - bar the Conservatives – have backed an emergency motion supporting the First Minister’s efforts to protect Scotland’s place in the EU. Whilst Ms Sturgeon’s attempts to open up lines of communication with the EU directly have been rebuffed, Theresa May has made it clear she will be seeking a ‘UK-wide approach’ to any Brexit negotiations.
The implications of Brexit are also being keenly felt in Northern Ireland. In particular, questions are being asked around what arrangements will need to be put in place at the border with Ireland – which is the only land border the UK has with the EU. Sinn Fein’s Deputy First Minister has called for a poll on a United Ireland.
The immediate aftermath of Brexit was dramatic, with £30 trillion wiped off the stock market, and the pound reaching a 30 year low against the dollar and falling sharply against other currencies including the Euro. Credit ratings agencies downgraded the UK’s rating demonstrating a lack of confidence in the UK economy and an expectation of instability and slowdown to come.
Much of this early instability has now settled; the stock market has more than recovered its initial losses reaching new record highs and the performance of the UK economy continues to be strong as the fastest growing G7 country. However, significant concerns about the economic consequences of the uncertainty caused by the Brexit renegotiation process remain as investment decisions are postponed or cancelled altogether. The horticulture sector is likely to see indirect consequences of the uncertainty and the impacts this is having on investment decisions.
In the longer term, the impact will be determined by the nature of the regulatory settlement that emerges. As the UK embarks on the as-yet untested negotiation process, we wait to see the shape of the agreement that the UK and EU reach - the level of access to the EU single market that this grants the UK, and the extent of continued collaboration on issues such as trade and migration.
What happens next?
Brexit – the process
Following the vote to leave, the then Prime Minister, David Cameron, announced that he would not immediately trigger Article 50 of the Lisbon Treaty – the formal mechanism to negotiate the withdrawal of a member state. Whilst his successor, Theresa May, has been clear that “Brexit means Brexit” she is equally in no rush to pull the starting gun on Brexit negotiations, it will now to be triggered in late March 2017 to allow time for the government to determine its negotiating position and publish a White paper detailing this.
Once Article 50 is triggered, the UK will have two years to negotiate its exit and reach a deal with the EU. During this two-year period, the UK will continue to abide by EU treaties and regulations, and retain full access to the single market, but that it will be formally excluded from any decision making at the EU level, including from EU council meetings and will not take up its scheduled Presidency of the European Council in 2017.
Once a draft deal is agreed it must be ratified by at least 20 EU member states. If, however, a deal is not reached in the two years the UK will automatically leave – whether it accepts the terms on the table or not. This period can be extended, but this would require unanimous agreement of all member states and there have already been indications that this is not something that they would be willing to do. Several EU leaders have stated that they will not enter informal negotiations until the UK triggers Article 50 and the President of the EU Commission Jean-Claude Juncker has urged the UK to “clarify its position” on Brexit “as soon as possible”, indicating that they are keen to begin the lengthy process.
The two-year Brexit negotiations will be complex and far-reaching, setting out the arrangements for cutting the ties between the UK and the EU. However, on top of this, the UK will need to initiate discussions with countries around the world to lay the groundwork for new trade deals (once UK is no longer part of the EU bloc) which is a process which can take many years.
One of Mrs May’s first actions as Prime Minister was to appoint a Secretary of State for Exiting the European Union, David Davis MP and Liam Fox MP as Secretary of State for International Trade. Both of these appointees are leading Eurosceptics, demonstrating the Prime Minister’s efforts to create a cabinet unifying high profile figures from both the former Leave and Remain camps. Mrs May has also established a cross-Whitehall Cabinet Committee on Brexit, which brings together key members of the Cabinet, to set the direction of travel and ensure that the UK gets the best deal possible for its departure from the EU.
A re-shaping of the regulatory environment
Brexit will also initiate a significant process of legislative review in the UK, as Parliament decides which EU statutes and regulations should be replicated, amended or replaced in UK law. Whilst elements of this will be linked to negotiations at the EU level, there will also be a clear and distinct domestic agenda – with many who voted for Brexit wanting to see the UK exercising its sovereignty and ridding itself of EU red tape. Whatever happens, we are likely to see the biggest legislative upheaval in British political history.
To do this, the Government will introduce a large number of technical bills before Parliament. This will reshape the regulatory environment for British businesses which will present both opportunities and threats. Key to all of this will be the balance between cutting un-wanted red tape and maintaining the necessary regulations to ensure the UK can continue to enjoy a significant trading relationship with the EU.
Options for the future
Whatever the outcome of the negotiations the UK’s decision to leave the EU will have a significant impact on the horticulture sector: the legislation that governs the sector; how and from where workers are recruited; and the nature of the UK’s trading relations.
The Prime Minister has stated she doesn’t necessarily envisage that the UK will adopt an ‘off-the-shelf’ model for Brexit, and that a tailored approach may be more appropriate. One example of a model which the UK may be able to replicate elements of is that of Switzerland. Switzerland is not in the EU or the EEA but instead has a complex network of bilateral agreements, allowing it to have a fully-customised relationship with the EU. Importantly it does accept free movement of people from the EU, and suggestions by Switzerland that this may be withdrawn has resulted in the EU warning that this will result in loss of access to the Single Market. Given that the referendum result was clearly a rejection of free movement people this sort of agreement would be unpalatable for many. However, the UK is a much larger market than Switzerland so should be able to negotiate a trade deal that reflects this.
Whatever the shape of the UK’s future relationship, it seems unavoidable that the greater the level of access the UK hopes to retain to the Single Market, the greater the level of EU regulation the UK will be compelled to accept as a condition of this access, and yet the UK will no longer have a voice in influencing or shaping such regulation.