Michael Gove has today set out a policy on farming under which it seems the Government would continue to protect farming generally through high tariffs, high consumer standards, as well as direct taxpayer help, while also continuing to follow EU policies banning the use of new farming technologies, especially in bio-technology.
Now I am no expert in the minutiae of farming and also I yield to none in my admiration of Michael Gove in his efforts to achieve Brexit, but I feel compelled to say that this latest Gove programme is not just a big shift from the free trade agenda that lay at the heart of the Lancaster House speech, widely endorsed by Brexiteers with Michael Gove among them. It is also very bad from the viewpoint of the general economy. This much concerns me.
Farming has big effects on the economy indirectly through its huge use of land. Subsidising it drives up the price of land, raising costs throughout other sectors.
There are good arguments for direct taxpayer help to marginal farmers on uplands for example, because they preserve a valuable rural environment. There is also a good case for the taxpayer to help farmers with adjustment costs as they react to necessary competitive changes. But there is no case for continuing with blanket protection of farming, much of which is large-scale and highly efficient, well capable of adapting to world competition.
Consumers, especially poor consumers, stand to benefit hugely from reduced protection and from the expanded choice of cheaper foods that more tolerant food standards would bring; also, from eliminating bans on the use of newer technologies, especially bio-technology, in farming.
So, while Michael Gove may get plaudits from upper middle-class households parading their ‘ethical’ principles’, he risks alienating a mass of poorer voters who need to be able to buy much cheaper (and still perfectly safe) food.
But the gains from this free trade policy do not stop there. They would also increase competition in farming, raising productivity across the sector. Furthermore, by lowering land prices they lower costs across the rest of the economy, as land becomes more widely available for development.
Indirectly this both helps consumers through lower prices, but also expands our most productive service sectors, like the City, universities and health care, which are large users of land. In our calculations at Economists for Free Trade of the four per cent gain to GDP from free trade with the rest of the world, free trade in food is a vital element.
So, Michael Gove, erstwhile free trade Brexiteer, is repositioning himself in a way that would deny us many of the economic benefits from Brexit. While I have always admired Michael Gove, I deplore his shift of position in this vital area of economic policy.
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