In response to these negative reports in the press, Legatum have taken to twitter to defend themselves and also released a press release in which they attempt to address the accusations against them.
Hate to let the truth get in the way of a good story, but we don’t advocate a ‘hard’ or ‘soft’ Brexit; we simply want to help Britain achieve a good Brexit.
— Legatum Institute (@LegatumInst) November 26, 2017
We would just like to address two key things here –
- Their claim that they don’t advocate Hard Brexit.
- Their suggestion that they don’t have special influence over the form of Brexit that the UK government is pursuing.
Do Legatum advocate Hard Brexit?
“The Legatum Institute Foundation does not advocate a ‘hard’ or ‘soft’ Brexit; it wants to help Britain achieve a good Brexit – one that maximises the opportunities and minimises the disruption for the nation.”
Despite this statement, Legatum advocates the UK leaving the European Economic Area (EEA) Single Market and Customs union. See tweet:
PM spells out that we will NOT be a member of the single market. One of @ShankerASingham 3 pillars of getting Brexit right
— Legatum Institute (@LegatumInst) January 17, 2017
As their APRIL 2017 report A Blueprint for UK Trade Policy
by Shanker A. Singham says:
“In order to achieve this four-pillared trade policy, the UK will have to comply with three cardinal rules, as we exit the EU. First, we must come out of the Customs Union, because we need to be able to negotiate FTAs with other countries.
Second, we must come out of the EEA, or European Single market. We need to do this to be able to negotiate services trade deals with other countries, which requires us to put our domestic regulations on the table in a negotiation, something we cannot do from inside the EEA.”
Mr Singham says this, despite acknowledging later in the document (just some of) the potential dangers and disruption which likely will result from this approach:
“Leaving the Customs Union – This entails tariff disruption because without agreement, both the UK and EU would fall back to
the Common External Tariff. Second, there is potential disruption because of more difficult customs clearance. Third, standards and product regulation could lead to friction at the border.
Leaving the EEA presents problems in services trade in particular which has relied on a single
regulatory system. There will need to be interim measures on financial services…similarly, there will need to be interim
measures in aviation, life sciences, digital and other services sectors.”
In another report, they write:
“Interim arrangements should avoid EEA or EFTA membership.”
They maintain that for us to become a successful ‘Global Britain’ after Brexit we need to be outside the EU’s Custom’s Union, Common External Tariff or Common commercial policy. On those points, we agree.
Where we disagree with them is that we don’t believe that the UK should shun the EEA (European Economic Area) or European Free Trade Association (EFTA).
These structures and agreements would allow us to maintain largely frictionless trade with our largest trading partner – the EU27 while still allowing us to sign Free Trade Agreements around the world.
Legatum seems to think that by jettisoning all regulatory ties to the EU and EFTA we can ‘put everything on the table’ during trade talks to sign some super-duper trade deal with say – the USA. This approach is effectively putting all our eggs in one basket and hoping for the best.
Conclusion: We believe that the advice that Legatum provide could be described as reckless and would likely lead to a ‘Hard Brexit’ scenario.
Does Legatum have influence over the form of Brexit the government is pursuing? They say:
“We are flattered but perplexed by the absurd accusation that we are having an undue influence on Brexit: there are 4 members of the Legatum Institute Foundation team that work on Brexit, while the Government has thousands of civil servants at its disposal to advise them on Brexit.”
Only 4 members of our team work on Brexit, whilst the Government has thousands of officials advising them on the issue. Whilst flattering, it’s a bit of a stretch to suggest that we have undue influence on Brexit.
— Legatum Institute (@LegatumInst) November 26, 2017
Legatum have met with the Secretary of State for Exiting the European Union, David Davis on many occasions:
Secretary of State for Leaving the EU David Davis speaking to our Business Forum this morning. Confirming we will trigger Art 50 in March pic.twitter.com/5rivIs921N
— Legatum Institute (@LegatumInst) January 11, 2017
Recently, the Times had an article on its website which joins the dots between the mysterious Legatum Institute, David Davis MP and Junior Brexit Minister Steve Baker MP.
As readers of this blog will know, this is a topic we have been looking at for a while now…
Parliamentary Under Secretary of State at the Department for Exiting the European Union Steve Baker MP has not only spoken at Legatum events before – he has even spoken highly of their advice in Parliament.
Government Minister Michael Gove is also a fan of Legatum, notably praising Shanker Singham (as recorded in Hansard).
The Guardian also reports him saying:
“I’ve been impressed by work that has been done by Shanker Singham of the Legatum Institute [a thinktank] who is probably at the moment in Britain the leading expert on trade deals, and he’s pointed out that it would be possible for Britain to conclude a deal not just with America but with other countries like New Zealand, whose prime minster was here recently … Shanker Singham has concluded that such a deal could increase Britain’s GDP and jobs and growth significantly. There are some experts whom one does not automatically follow, but I’m inclined to believe that Shanker Singham and the work the Legatum Institute has done points the way to a successful trade relationship between Britain and other countries.”
According to The Independent:
Conclusion: We believe that it is proven beyond doubt that Legatum has unparalled access to Government Ministers and has convinced several of them that their ideas are sound. If this is the case, then the UK is likely to pursue a Hard, Disruptive Brexit.