Lord Mark Price: my tips on how to future-proof your business post-Brexit

Effusive, opinionated and well informed, Mark Price is rarely lost for words. But when I ask, as the possibility of a no-deal grows, if he’s still feeling positive about Brexit, the silence lasts at least half a minute. “For a whole host of reasons that is the toughest question to answer,” says Price, eventually. “On the basis of common sense, practicality, rationality, there is no reason why a deal shouldn’t be done.”

And yet, politics has never been rational or practical, “whether it’s peace in our time” before the start of the Second World War “or the vote to end the civil war in Colombia”. And it’s looking like the Brexit negotiations are stuck in a similar political deadlock.

In contrast, Lord Price, the former Waitrose MD, is a pragmatist. A man for whom ideologies are less important than getting things done. He voted to remain and argues Brexit won’t fix the issues that voters in the referendum were protesting about, which comes down to “discontent around public services, wages, and job security”. And while continuing his work as a peer of the realm (he’s there every day), he quietly stepped down as minister for trade a year after the referendum, to focus on his other interests.

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But Price can see the potential upsides in a Brexit deal. As minister for trade he travelled to 45 countries to boost the UK’s international trade, and cites Switzerland’s free trade deal with China as an example of the possibilities a Brexit deal might offer.

And while he concedes that the prospect of a deal with Europe has receded since we last spoke, in April, he believes the EU’s apparent intransigence over the Northern Ireland border is tempered by “real concerns”, from eastern European and Nordic countries in particular, that “if [EU negotiators] are too harsh, the UK will veer towards the US. They are keen to get to a position where the UK doesn’t have an unassailable commercial trading advantage and is given a free hand to compete independently, but is not so penalised that it reverts to America. Within that paradigm lies the politics of where we ultimately end up.

“The PM is trying to get a middle option between a Canada-style deal and a Norway-style EFTA under EEA rules, the best of both, with enough compliance with Europe to be able to trade with the single market. If she gets that she’s done incredibly well. I thought her biggest challenge was going to be getting it through Europe, not getting it through British politics, but there you go.” He also believes that even if a deal is done, the two-year transitionary period may still be needed to resolve some unresolved issues.

Even if the UK reverts to WTO rules, however, Price can still see workarounds.

“The UK government could just say ‘we’re going to apply a tariff at 0% on all these imports’. You do a Singapore on food”

It is not inevitable that food prices will go up, for example, even though, as he points out, so much of it comes from Europe. “I would not have thought the government would want to drive inflation into the economy. But they don’t need to do that. The UK could just say ‘we’re going to apply a tariff at 0% on all these imports’. You do a Singapore on food. That would mean the consumer would get low prices from Europe but also the rest of the world.”

So how would that work? At the moment, he explains, the government’s working assumption is that the UK will replicate the same goods schedules we have today, so there’s consistency with the EU on tariffs. “We’ve posted them already. It’s amazingly complex, with different tariffs for every cut.

“If we fall back on to WTO rules, however, we could say ‘we are not going to apply a tariff on lamb, it’s going to be zero’. And the supermarkets can import from anywhere in the world and not pay a tariff.”

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However, there are consequences. The obvious one is the pressure it places on farmers. “If you’re a processor and there are no tariffs, your cost of production is lower and you can pass that on to the consumer, or take extra margin. If you’re a beef farmer and there’s no tariffs on beef from Uruguay or Argentina, it becomes more problematic. British farmers will be saying: ‘hang on a minute’”.

But it will be “easier” for the government to deal with the farmers, he believes, “than to say to 60 million consumers ‘your fruit & veg is going to cost more, your wine and cheese will cost more’. There are solutions.”

Like what? “The government could say they don’t want to subsidise farming any more, that farming has to be globally competitive, and give farmers, say, five years of compensation to move to a different system. That’s how you avoid this problem in the supply chain. That’s what I would do anyway. Who knows what the government will do.”

Not that convincing farmers will be easy. While the supply chain is vast and global, and assortment tastes have changed wildly and are “far more cosmopolitan”, supporting British farmers and buying local produce now has “much greater resonance with British consumers. The growth of farm shops is further testament to that.” But then Price never said this would be easy.

In the event of a no-deal Brexit, a zero-tariff approach to imports would also be particularly harsh for exporters, as it would not be reciprocated. “If tariffs go up to Europe then trade will to some extent drop, unless UK producers can become more productive, or something happens to sterling that effectively neutralises [the tariffs], so UK goods remain competitive.”

On the other hand, with the M26 now undergoing major roadworks to accommodate delayed lorries ahead of a no-deal Brexit, Price believes a zero-tariff deal would overcome this, at least for inbound goods. The other option mooted has been to wave lorries through, raising fears that food safety would be threatened, and smuggling might increase.

“We know it happens. Effectively there is more scope for those things where there is no regulatory compliance and you’re not in a single market.”

As to whether this is a moment to introduce a food security strategy, Price sees two sides to the argument. On the one hand, UK supermarkets “have done a brilliant job of bringing consumers low prices and a wide selection of goods from around the world. And often in spite of the government, rather than because of it.”

On the other hand, food security is “a legitimate issue for the government to think about”: whether we want to have greater food security within the UK and to what extent the government is prepared to subsidise that.

“We will be more competitive,” says Price. “We will be more open. And there will be fewer tariffs. If you look at all the recent trade deals, they’re virtually 98%-99% tariff-free. What’s going up is regulatory compliance. People are getting tripped up by regulations that say, yes you can import this fruit or this veg but it has to be just like this. You cannot use these pesticides. If you comply with these regulations, and you can prove you comply with them, you can import them. But as to the tariff it’s all moving towards the zero rate.

“Because of that we’ve just got to become more efficient and at the moment our productivity is pretty woeful. We are bottom of the G7 because we have relied on inexpensive labour. Whereas a German business would have a 70% higher investment. It’s because the labour cost is so much higher.”

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And there are other areas in which the UK will need to improve. One is intellectual property. “Retailing is not in a great place and isn’t going to be for a long time. A 10-year period at least.” Price argues retailers will need to build IP to achieve differentiation. But that may mean there’s less room for brands.

“Every food retailer is more and more focused on unique own label, which can’t be replicated. In an internet world, innovating and owning your own IP is vitally important.”

And finally, he is concerned about inclusivity. “We’re in danger of seriously alienating our workforces,” he warns. In a culture of corporate greed, combined with austerity and political tinkering around universal credit, job insecurity is rife and employee engagement is low. This environment, he believes, is why Jeremy Corbyn has proposed employees should receive a 10% stake in the business they work for. A sign, says Price, of “a change in the mood music”.

That’s his biggest frustration about Brexit. Not the deal or the lack of it or the negotiations around it. “With the focus on Brexit, we’ve forgotten there’s a planet out there. My greatest regret about Brexit is that there are so many important issues out there - affordable housing, NHS, inclusive society, education - but politicians don’t have the bandwidth to tackle them.”