In a first for FactCheck, we find ourselves studying beer mats. It’s an unusual method of political communication, but it seems to be making a splash.
Patrons of the Wetherspoons chain of pubs may have noticed that on Wednesday, half a million mats were placed in the company’s 895 branches across the UK – to deliver a “hard-hitting message on Brexit to Parliament”.
Here it is:
Clearly, the first statement is a matter of opinion. We’ll leave that question for parliamentarians and columnists.
The third point has been discussed at length already. We’re pleased to see that Wetherspoons haven’t fallen into the trap of repeating the now-infamous “£350 million a week” claim that we heard from some Leave campaigners before the referendum.
There are many ways of calculating this, but estimates from the House of Commons library suggest that the UK’s net contribution to the EU in 2019 will indeed be £200 million a week.
This figure is calculated based on the £390 million a week we will give the EU in 2019 minus the £190 million we will get back in the form of rebates and payments to the UK public sector.
But what about the second, less familiar, claim?
“The EU currently charges taxes on food imported from outside the EU. From March 2019, the government can and should eliminate these import taxes. This will result in a reduction in food prices in shops and pubs”
Regular readers will remember that last month, we FactChecked a related statement made by Chris Grayling about the future of food in the event of a no-deal Brexit.
We found that a no-deal Brexit would mean the UK would have to put tariffs on imports from the EU if it wanted to levy existing tariffs on non-EU imports.
This – according to the British Retail Consortium – would mean tariffs of around 22 per cent on food imports from the EU, which would “put upward pressure on consumer food prices”.
It seems the boss of Wetherspoons, Tim Martin, disagrees with this approach. He says “there is absolutely no doubt that food prices will be cheaper without a deal, if the UK chooses the free trade option” and that the 22 per cent figure is part of a “coordinated campaign to dupe the public”.
Mr Martin reckons that his pubs will “save an average of 3.5 pence per meal and 0.5 pence per drink if we leave the EU and abolish food import taxes in March 2019 – similar savings are likely to be made on meals consumed inside or outside the home in the UK”.
We asked Wetherspoons to show us how they reached this calculation. They couldn’t provide us with the exact figures.
But when FactCheck spoke to Mr Martin, he told us “as regards UK consumers, they would only pay higher tariffs – which is what most people seem to think would happen – if the UK government decides to impose tariffs on EU products”.
He argues that the UK could opt not to charge any tariffs on imports – EU or otherwise – which would equate to savings for the consumer.
On the face of it, that makes sense. If the UK was willing to abolish all import charges (from EU and non-EU countries), one element of the cost of food and drink would go down.
But that’s far from the full picture.
We spoke to Alan Matthews, Professor Emeritus of European Agricultural Policy in the Department of Economics at Trinity College Dublin. He explained: “Wetherspoons is correct to say that UK food prices are higher because of the tariffs applied on imported food as a result of EU membership.”
But he points out some problems with Mr Martin’s claims.
“Wetherspoons is remiss in not taking account of the possible impact of higher trade costs on imports from EU on UK food prices. True, if the EU is a higher cost source of imports after Brexit, and the UK switches to importing all its beef from Brazil rather than an EU country like Ireland, these higher trade costs are irrelevant.
“But that scenario is highly unlikely. The UK will still want to import Italian parma ham, Spanish chorizo, Irish beef, French cheeses etc. In these cases, even if the UK does not impose tariffs, there will be higher trade costs of moving these goods through customs and port health checks.”
Professor Matthews cites the Agriculture and Horticulture Development Board (AHDB), which estimates that these additional costs could add 8 per cent to the cost of some food imports from the EU.
This is important because 79 per cent of our food and drink imports come from the EU, according to the British Retail Consortium (BRC).
A cost increase of 8 per cent would “offset some of the gain from lower tariffs”, says Professor Matthews. “Even if we streamline customs clearance, the fact that exporting and importing firms will now have to manage customs clearance documentation or employ freight forwarding agents to do this for them will add a percent or two to the cost of food imports from the EU even if they are not animal, fish or dairy products.”
He goes on: “Weatherspoon is also remiss in ignoring the impact of Brexit on exchange rates which has an inflationary impact on food prices.
“Already, the day after the Brexit vote, sterling lost 10% in value and it has not recovered since, and this 10% depreciation is pushing up food prices now in the UK. If there is a hard Brexit as the company supports, it would be highly likely that sterling would further depreciate, given the damage it would do to the UK economy.
“Any further depreciation of sterling would also offset perceived savings of shoppers from lower tariffs.”
The boss of Wetherspoons, Tim Martin, is technically right that the cost of import tariffs could be avoided if the government decided not to impose any tariffs at all.
But these modest savings would be offset by two more significant factors.
- Simply getting goods across the border without a trade deal will become much more expensive for UK businesses, even without tariffs
- The no-deal Brexit that Mr Martin advocates is likely to weaken the pound even further, which drives up prices of imported food and drink to the UK
These two factors alone are likely to push up the cost of food and drink overall.