Revamping the Board of Trade
Sane Planning, Sensible Tomorrow
Before she was very briefly Prime Minister (which happened exactly one year ago today), Liz Truss was President of the Board of Trade as part of her position as Secretary of State for International Trade. One of my many roles I undertook while her adviser at the Department for International Trade (RIP) ws overseeing the work of the Board of Trade. I bring this up because it has recently been announced that the current President of the Board of Trade, Kemi Badenoch, is planning on revamping the Board by bringing in representatives from the music, film, and fashion industries. While I think the Board of Trade definitely does need a refresh, this should probably look different from what Badenoch had in mind.
What exactly is the Board of Trade?
That’s an excellent question - thanks for asking it! I’ll avoid giving a history lesson here but it can trace its origins back to 1622 when James I set up a committee at the end of the Dutch Twelve Years’ Truce to investigate the parlous state of the English economy and the root causes of supply issues (some things never change). It grew up in influence and power and became primarily concerned with plantations in America until it was dissolved in 1782.
You can’t keep a good dog down though so it was reestablished two years later by Pitt the Younger and began to focus more on the domestic economy as the Industrial Revolution took off, dealing with factories, labour disputes, patents, and the like.
Its focus for most of the 20th Century was again domestic issues looking at labour disputes and working conditions. Once the UK joined the EEC in the 70s the Board ceased to function as the country no longer had an independent trade policy.
Then Brexit happened. So in 2017 it was reestablished yet again and its membership comprises Privy Counsellors with external advisers drawn from business and academia with the remit of promoting trade and investment.
What’s wrong with the Board of Trade?
Having a Board of Trade is a good thing. It’s great that we have a body making the case for free trade and seeing how we can help more businesses to do so while also attracting more investment into the country.
However, one of the failings is that its purpose and scope are actually quite vague. It meets on occasion to discuss various topics but it is unclear as to whether or not this makes any difference or if the matters and any policy suggestions discussed are ever implemented by the government.
The members and advisers are also part of the problem. To be a member you have to be a member of the Privy Council and so that consists of the Secretary of State for Business and Trade, the ministers in her department, and the Secretaries of State for Scotland, Wales, and Northern Ireland. This obviously limits what is going to be discussed and proposed as they are members of the government.
As for the advisers, it is more of a mixed bag. During the meetings the conversation was always dominated by two members, both of whom knew very little about international trade. One adviser in particular would speak at length about their niche interests and would frequently start conversations with ‘You see, in economics…’ which was invariably followed by something either incredibly basic or completely unhinged. There were also some excellent advisers on the Board but not really anyone with deep expertise in trade policy. While I’m sure adding people from different industries as Badenoch has proposed will bring some benefits, it will not address the key issues with the Board.
What should a revamped Board of Trade look like?
A revamped Board of Trade has a lot of potential to shape policy, boost trade and investment, and make us all better off.
Independent
It should be truly independent of the government. While its remit should be set by the government, its membership should not contain anyone from the government. It should be free to challenge government claims and policy and to make its own policy proposals with members not feeling unable to speak out.
Expert
Membership should comprise trade experts who have an in-depth knowledge of the issues and extensive experience of working in trade issues. This could be similar to the Council of Economic Advisers in the US and should include experts from academia, industry, and public policy. Its role would be to provide objective advice to the government on trade policy.
Blue sky thinking
At one point during Truss’ time at Trade it was suggested that the role of the Board was to think up new ideas and set out exactly what trade policy should look like. Part of my role was overseeing the production of the Board of Trade reports. I oversaw the first two and the initial stages of the third. They are robust and analytical work and are a testament to the efforts and skills of the hard working and talented civil servants and officials who worked on them (including over Christmas for the first one).
However, a fair criticism is that there was a lack of new policy proposals. This is because the amount of flexibility we were given kept changing and it was eventually decided that the papers should be viewed as coming from the government. As such, they had to not only get approval from the Secretary of State but also from every other department as well as Number 10. This meant that nothing controversial or innovative could be suggested.
A revamped Board of Trade would be given the freedom to think up and make bold and novel ideas and suggest new policy proposals. It should be able to ask the big questions in order to develop the best possible trade policy for the country.
Analysis & assessment
The Board of Trade should also be responsible for assessing the impact of trade policies and agreements as suggested by the UK Business and Trade Commission. This would involve an analysis of the UK’s current trade performance and looking at the impact of current regulations on trade while also examining the probable impact of future trade deals. Essentially it would function like the equivalent of the OBR but for trade.
I wrote for the Evening Standard yesterday on the importance of getting forecasts and analysis right when it comes to the overall economy. It is no different when it comes to trade. The country has real strengths but also weaknesses when it comes to international trade and so it is vitally important that the government, businesses, and investors have a clear idea of what they are, how to play to our strengths, and how to fix problems.
This should also help to get a clearer picture and shape the debate around FTAs. Claims and counterclaims are often made about the economic impact of trade deals, some of which are completely ludicrous.
Revamping the Board of Trade is a good idea. Its experts should be completely independent of the government and given the freedom to propose trade policy and objectively assess the UK’s trade performance. Doing so has the potential to boost trade and investment, support businesses, create new jobs, increase wages, and drive economic growth.