The Remeave Party. Labour’s tortured position on Brexit is about to be exposed

The parliamentary recess this week offers the Prime Minister the welcome chance to develop her position further before what will be a dramatic month before the EU Council meeting right at the end of June. Reaching an agreement on the legal text surrounding the UK’s withdrawal from the EU by that date is important.
Any failure to do so means that the question would be deferred until the October Council meeting, which in turn would mean that there would be precious little time to reach a consensus on the basic principles of the future UK-EU relationship (or ‘end state’) before the December Council. That is the last realistic moment for such an understanding to be achieved to allow there to be time for both the UK and European Parliament to debate and endorse the exit from the European Union that is scheduled to occur at 11pm London time on 29 March 2019. Although there will doubtless be near-death moments aplenty in the next four weeks or so, it remains the view of BVCA Insight that the Government will both manage to secure a positive conclusion with the EU-27 and avoid defeat on the various amendments to come in Parliament.
This is in part because of the position of the Official Opposition and its leadership. Labour (the ‘Remeave Party’, splitting the difference on the UK’s exit to all intents and purposes) has had the benign fortune thus far not to be asked too many demanding questions as to what its view of the ‘end state’ actually is. Had that not been the case, then, frankly, the collective stance of Jeremy Corbyn and the Shadow Cabinet would have made that of the actual Cabinet look a model of unity and intellectual coherence. Their policy over the past almost two years – charitably described as one of ‘strategic ambiguity’ – has not really been the subject of intense scrutiny, allowing Labour the luxury of being able to criticise the Government without putting forward an alternative proposal.
This enviable situation will be put to the test in public fashion as the House of Commons takes up hostile amendments to the EU (Withdrawal) Bill that were embraced in the House of Lords. It will also have to respond to the ‘backstop’ notion on the Irish border when Mrs May outlines her plan.
In truth, Mr Corbyn’s role in the entire Brexit saga has been Delphic and underrated. With the sole exception of David Cameron - whose wheeze it was to commit a majority Conservative Government to an in-out referendum on EU membership, on the assumption that the Liberal Democrats would continue to hold the balance of power and thus Nick Clegg would veto the whole project - Mr Corbyn has probably been the single most important actor in UK-EU events since his victory in September 2015.
Polls taken after the referendum suggested that almost half of Labour voters either thought that their party favoured the UK quitting the EU or did not know/were not sure where they stood. This would not have been the outcome if either Andy Burnham or Yvette Cooper has secured the leadership of the Labour Party instead of Mr Corbyn. Either of these more mainstream figures would have campaigned vigorously for Remain and would have been willing to share a platform with the then Conservative Prime Minister to impress on their supporters, in the most powerful visual fashion, that they were in favour of staying in the EU.
Mr Corbyn, by contrast, conducted what might be politely described as a ‘low energy’ effort during the referendum. When he spoke in favour of the EU it was to endorse its drive for cleaner beaches and perking up the bee population (I kid you not) and he would manifestly have rather been seen hand-cuffed to a plague-ridden corpse than within twenty metres of Mr Cameron at a joint appearance speaking together about staying inside the EU.
At best, he did not try hard in the referendum. At worst, he cynically undermined the Remain side. In fairness, as he had been a serial Bennite opponent of the EU during his whole time as a backbencher at Westminster, it was something of a stretch to turn himself into a cheerleader for Brussels. Yet it was his ambiguity more than any other factor that finally proved to be decisive in the referendum.
So what is Labour’s position on the Customs Union then?
That is not an easy question. It has been the subject of heated dispute within the parliamentary party. The result is that Labour embraces ‘a Customs Union’ but not ‘the Customs Union’. This is not straightforward to explain because, with the partial exception of Turkey, there is no precedent for it.
Conceptually, it appears to mean that the UK should exit the Customs Union but then negotiate an accord with it. Whether this would allow the UK to negotiate its own separate trade deals apart from the EU is not completely clear. The assumption is that it would not but who knows really. This contorted formula, which appears to be the choice of no one else except (curiously) the CBI, seems to be Mr Corbyn and John McDonnell offering something of a sop to those in the PLP and, somewhat more significantly, the trade unions who want Labour to stand for a ‘soft Brexit’.
This is not much of a sacrifice for them to make, as the Corbyn camp is not that wild about the idea of a bespoke free trade deal with Donald Trump and the United States. So, Labour will oppose whatever it is that the Government comes up with on the Customs Union/Irish Border even if, as an in extremis backstop, it also looks something akin to ‘a Customs Union’ but not ‘the Customs Union’. Such is political life.
What about the single market then?
Labour’s stand on the single market has evolved by stealth. In essence, John McDonnell in particular could not be more keen to be shot of it. For a start, it has the word ‘market’ in it, which has very little appeal for the Shadow Chancellor (at least the Customs Union involves a ‘Union’, he likes those). More substantially, one of the fundamental features of the single market are the multiple limitations on State Aid that have (plausibly if perhaps excessively) been deemed to be crucial to its operation. These State Aid restrictions are potentially crippling for an economic programme based on a theme of ‘socialism in one country’. Almost every aspect of Mr McDonnell’s beloved proposed National Investment Bank would fall at the first fence as far as the State Aid regime is concerned. In essence, therefore, Labour is basically opposed to the EU single market and would want to leave it.
This cannot be admitted without all hell breaking loose within the PLP and with some of the unions. Hence, in so far as it can be divined at all, Labour is publically in favour of ‘a single market’ with the EU but not ‘the single market’. It is against, for instance, a Norway-type EEA agreement because the EEA involves accepting State Aid limitations. In the abstract (and abstract is the art-form of the day on this one), Labour would like to agree maximum possible access to the single market consistent with the minimum possible limitations on a Labour Government to nationalise - or otherwise take a commanding/controlling stake in - more or less anything that moves, has once moved or might later move. Needless to say, this is not a bargain that anyone inside the EU-27 is rushing to award the UK.
So what will happen when Labour votes on these various amendments from the House of Lords?
It will split. All over the shop. One faction of the PLP (what could crudely be labelled as the ultra-Blairites) essentially wants Labour to be the party of the second referendum. Another faction of Labour MPs does not go quite that far but still wants to remain in both the (not ‘a’) Customs Union and the (not ‘a’) single market. There will be those who stick the official line of ‘a’ (not ‘the’) Customs Union and a (not ‘the’) single market. A few hardy souls will pick one of ‘the’ (not ‘a’) Customs Union/single market alongside another ‘a’ (not ‘the’) Customs Union/single market depending on their constituency/ideology/trade union link.
If enough of them can do that in different ways, then technically that allows for a six-way division. A very small band of purists (about 10 in total) who were for Leave from the start will vote with Mrs May. It will be, in short, something of a shambles. Yet as they are just the Opposition, who will actually care?
Tim Hames
Director General, BVCA