The Conservative leadership contest is becoming a no deal arms race

Burnt by his opponent’s criticisms that he was not sufficiently committed to taking the UK out of the EU by 31 October, Jeremy Hunt has set out his 10-point plan to both renegotiate the exit deal and prepare for a no deal Brexit if the renegotiation fails. This includes a new Cabinet Task Force; a plan to renegotiate the Withdrawal Agreement over the summer; and extra spending to mitigate the impact of a no deal exit on certain businesses.

While it may go down well with the Conservative Party members who will choose our next Prime Minister, Hunt’s speech shows how the leadership contest is dragging the debate away from the real world.

Hunt’s plan ignores the EU's position and disregards the parliamentary arithmetic

One of the key conditions of the extension of Article 50 in April was that the Withdrawal Agreement was not up for renegotiation. And despite – or perhaps because of – their distraction with deciding on the next President of the Commission and other ‘top jobs’, EU leaders have consistently stuck to this line.

Even if the EU were willing to reopen the agreement, it is not clear how Hunt could, in just three months, achieve a deal that secures the support of a majority of MPs. He intends to deploy a new negotiating team which consists of politicians from across the Conservative Party and the DUP, supported by a new bunch of officials, but the Government’s working majority is shrinking and Hunt is likely to face the same arithmetical headache as Theresa May.

The plan to ramp up no deal planning ignores the reality of what that means

Hunt said that all civil service leave in August would be cancelled as officials would need to focus on no deal preparations – which would be the priority for all government departments under his premiership. But this assumes that the civil service can manage no deal on its own, and Hunt has not said what he will do differently to May to ensure that the country is ready.

The biggest issue is whether businesses are ready for a no deal exit – and many, having prepared unnecessarily twice, will be unwilling to do so again unless they really believe that the Government is serious about a no deal and that Parliament will not find a way of blocking one. And the real-world impact of a no deal exit depends as much on what EU countries and the Commission do as it does on the actions of the UK Government.

That is not in the new PM’s gift. Cancelling civil servants’ leave may not be either, but even if it were it would not help businesses or other countries prepare for no deal.

Hunt's speech was very expensive

Jeremy Hunt has also said that he would use an emergency no deal Budget in September to confirm significant cuts to corporation tax and business rates, as well as to publish the details of a ‘no deal relief programme’ to help affected industries. This may be a hostage to fortune: depending on its timing, such a Budget could present another opportunity for MPs to try to frustrate a no deal exit by amending the legislation that would follow.

We already know that the Treasury thinks a no deal Brexit would eliminate the £27bn headroom the Chancellor has said would be available with an orderly Brexit. Taking away a further £13bn of corporation tax revenue while spending at least £6bn on certain industries – particularly fisheries and farming – is only going to put more pressure on the public finances. Spending and tax cuts could be a sensible response to a no deal exit – but these proposals are not particularly well-targeted.

His promise, albeit vague, of financial support for affected businesses shows that the Foreign Seretary at least recognises that choosing to take the UK out of the EU without a deal would cause problems for some sectors of the economy. But without any details, it’s impossible to assess that relief programme for affected industries – and it is worth noting that export subsidies for agricultural producers are not allowed under World Trade Organization rules. Promising more money to farmers and fishers may sound good, but it is little more than a meaningless pledge.

Today’s pledges may win votes but they don’t solve the fundamental issues

Hunt's recognition that he may need “a few more weeks” beyond 31 October to secure a deal shows that he knows his renegotiation plan won’t be easy, but he has ramped up the rhetoric of this leadership contest. His words are likely to be popular with Conservative Party members – the people who are choosing the next Prime Minister – but his plans, for both a renegotiated deal and for no deal, are unlikely to be achievable.

He has now raised the stakes considerably. If his opponent responds in kind, the country will be forced to watch on as the debate between the would-be Prime Ministers becomes increasingly untethered from the world as it is and instead speaks to the world as Conservative members would like it to be.