Friday 9 December 2022

There's a better Brexit strategy available to Labour

I’ve spent quite a lot of time both in last week’s post and the one before discussing Labour’s Brexit position. That’s because, as the earlier of those posts concluded, it’s the only question that really matters now in terms of how Brexit proceeds. That assertion is predicated on two, related, assumptions.

The first is that the Tories are incapable of substantively changing the form of Brexit because of the strength and rigidity of the Brexit Ultras, and the fear of a Farageist resurgence (£). That should be qualified by adding that they might, even so, be capable of changing it for the worse, for example by pursuing the EU Retained Law Bill and, in particular, by re-igniting the Northern Ireland Protocol row. More generally, Rishi Sunak’s administration seems to be going through the motions of governing, bereft of ideas, lacking a policy agenda, riven by internal divisions, and simply serving out time until it is put out of its misery. Its decaying stench is captured with acidic humour by the journalist Matt Carr in his latest substack newsletter.

The second and related assumption is that it is highly likely that Labour will win the next election, probably with a majority or, if not, leading a minority administration. It is an assumption that is widespread, even, and perhaps especially, amongst Conservatives. This explains why Labour is attracting more donations, much greater interest from lobbyists and businesses, and coming under much more intense media scrutiny now, across all policy areas but including Brexit. Victory seems there for the taking unless Labour blows it, but with that comes an understandable degree of caution, not least about Brexit.

Today, in the absence of much Brexit news, I’m going to devote the whole post to discussing Labour’s Brexit policy, including a proposal for a totally different strategy, one that is not so much bolder as more imaginative than anything I’ve seen suggested so far.

What is Labour’s Brexit policy?

As things stand, the Labour policy is to seek improvements within the existing Trade and Cooperation Agreement (TCA) framework, although the nature of these has not been fully spelt out. In particular, it has been suggested that Labour would seek a ‘veterinary agreement’, but it hasn’t been clarified whether this means committing to the ‘dynamic alignment’ on EU sanitary and phyto-sanitary regulations which is the key to reducing much of the border friction, including that on the Irish Sea border. The obvious assumption is that it does mean this, otherwise it is meaningless, but it hasn’t been made explicit, nor whether it establishes a more general principle for dynamic regulatory alignment in other sectors, and if so which.

The strategy appears to many commentators to be one of ‘alignment by stealth’ (£), giving enough hints to encourage anti-Brexit voters whilst being sufficiently vague to avoid alienating leave voters. One problem with this, apart from the obvious danger of pleasing neither group of voters rather than both, is that it reduces the legitimate space for extensive alignment, if this is indeed the goal, once the election is over. That may end up meaning only minimal changes, but, minimal or maximal, they would do relatively little – not nothing, but not much – to undo the economic damage of Brexit.

Is Labour getting it right?

As to whether this approach is right, there is a broad spectrum of opinion even amongst acute and well-informed commentators on Brexit and politics in general, and there is merit in all of the different things they say. For example, the Guardian columnist Rafael Behr argues that, despite the frustrations of erstwhile remainers and others, if Keir Starmer’s strategy was working the results would look … very much as, in fact, they do! I read that as a call for patience and realism rather than pushing Labour to take a more ambitious position, whether on Brexit or anything else. If so, there is some wisdom in that. The dangers of ‘purism’ in politics are well-evidenced, not least in the history of the Labour Party.

However, another Guardian columnist, Jonathan Freedland, points out that with the economic damage of Brexit now moving from the abstract to specific consequences for, for example, household food bills, it can’t continue to be politically ignored. Freedland doesn’t explicitly comment on what this means for Labour, but does remark that “in the eyes of the voters, Brexit was always a Tory project”. I read that as a call for Labour to make explicit the linkages of the cost-of-living crisis, Tory economic incompetence, and the Tories’ Brexit, and to offer a more extensive re-shaping of Brexit than at present. If so, that’s very much in line with what I’ve been arguing in recent posts.

Meanwhile, writing in the Financial Times, Andrew Duff (£), a former LibDem MEP and founder member of the pro-federalist Spinelli Group, urges Labour to take a far bolder line. This would entail an EU-UK customs union and the creation of a Ukraine-style Association Agreement but with several additional features which, cumulatively, would create a new category of ‘affiliate state’. Duff makes it clear that this proposal is as challenging for the EU as it is for the UK, entailing not just that the EU “orthodoxy” against “cherry-picking” be dropped, but EU treaty change. As he puts it, “[t]here is no post-Brexit solution that does not entail radical reform on the EU side as well as a bold change of gear in Britain.”

For what it is worth, I think that this would be a goodish outcome, and have done since January 2018, not least under the influence of Duff’s earlier writings on this. However, it seems extremely unlikely that Labour would adopt it as their policy, and Starmer’s repeated comments about both the single market and a customs union bear that out. He and Labour may get to this point eventually, but it surely isn’t in prospect before the next election. Moreover, whilst Duff understands the internal politics of the EU far better than I do, I really doubt whether it is ready to undergo the kinds of changes he proposes in order to improve its relationship with the UK.

Even if Labour promised more, could it deliver?

Behind that doubt lies another issue, which the discussion about Labour’s Brexit position too often ignores, my own included. Commenting on my previous post, Bryan Kelly, a long-term reader of this blog, emailed me to make the point that Starmer might sensibly judge that it is not worth expending political energy and capital in proposing a major change to the UK-EU relationship if there is no reasonable chance of the EU accepting it.

To do so would carry not just the electoral risk of making such a proposal but the risk of failing to deliver on it when in government. I would add that it also risks perpetuating what has been pervasive in so much of the Brexit process, namely a chauvinism, or at least myopia, whereby the UK simply has domestic debates about what it wants and doesn’t want, without regard to what is acceptable to the EU.

These risks apply most obviously to Labour adopting a ‘re-join’ policy, and hardly less to any bold, Duff-type, proposals, but they also apply to all versions of the idea of seeking single market membership. The key question, Kelly suggests, isn’t so much whether the EU (or EFTA, for that matter) and its members states would or would not welcome such membership. It is whether they could rely on the UK polity to be able to sustain such membership.

Central to the answer to that question, Kelly argues, isn’t Labour policy, but the Conservative Party. For if a Labour government took the UK into the single market, what would stop a future Conservative government, five years later, or, for that matter, ten or even fifteen years later, from reversing it? Having gone through all the aggravation of Brexit, why should the EU risk going through it again with a second mini-Brexit?

Even if some individual figures within the EU (or EFTA) might say that they would welcome the UK into the single market despite this risk, that isn’t the same as the EU (or EFTA), and its member states, being willing to do so. And it remains a genuine risk at least unless either the Conservative Party completely implodes after the next election or it purges itself of the Brexit Ultras. Those are both conceivable, but the second, especially, is highly unlikely, and certainly can’t be relied on, now, for a policy that Labour must articulate now.

So this is a strong argument for Labour’s current approach of merely seeking refinements within the TCA although, even then, as I argued last week, the refinements sought could be more extensive and more explicit than Starmer is currently articulating, and take the form of the proposals made in the recent Tony Blair Institute report.

Is there a different strategy?

However, accepting that argument, it strikes me that Labour could use it in a far more intelligent and imaginative way. At the moment, Starmer is not only ruling out single market membership but now even claiming that doing so would not improve economic growth, which is obvious nonsense. He is also, with somewhat more reason, saying that renewed political uncertainty about the trading relationship would be de-stabilizing for businesses.

Instead, he could say that single market membership is indeed a solution to many of the economic problems caused by Brexit, but that it is not possible for him to propose it because it is not practically deliverable unless the Tory Party also commits to it. Were they to do so, it would make it viable for the EU to agree to and, whilst meaning a further change for businesses, would also remove the risk to them of that change only being temporary. That the Tories will not give such a commitment, Starmer would say, shows they are putting ideological dogma ahead of the national interest and economic competence.

At one stroke this would be honest and realistic, would have some appeal to erstwhile remainers (as it would show Labour trying to do at least some of what they want), would not alienate many Labour leavers (some of whom would be happy with the idea, whilst those who were not would see that Labour wasn’t actually proposing to do it, because of lack of Tory support), and it would make sense to the many people, not especially partisan for leave or remain, who recognize that Brexit has damaged the economy and that needs to be dealt with.

It would also turn the political spotlight firmly on to the Tories to justify their failed Brexit policy rather than allowing them to present Labour as trying to reverse or undermine Brexit. Obviously, the Tories would still claim the latter, but it is a claim which would be substantially blunted by the fact that Labour would not actually be proposing single market membership. Rather, Labour would be supportive of it if, and only if, it was accepted as a non-partisan, cross-party, common-sense solution to Brexit, something which could have a lot of electoral appeal to those voters who dislike political tribalism, and challenging the Tories to agree to it.

Of course they would not do so, and in that way would cater for their core, Brexit-supporting, voters who will never vote Labour anyway. But they would alienate some swing voters and help Labour to consolidate existing attack lines by depicting them as unfit to govern in the national interest, putting ‘party before country’, and held hostage by a small group of fanatics. All of which happens to be true. In the meantime, Labour would have created the space to openly pursue the most extensive possible upgrade of the TCA as a pragmatic and moderate holding position.

Gateways to this strategy

Needless to say, it may already be too late for this. Starmer’s repeated remarks about the single market may have precluded such a change of strategy. But the election may be eighteen months away – conceivably, as long as two years – so there’s at least the possibility of changing direction, citing changed circumstances. It is always possible to cite changed circumstances, anyway, and in this case it could be justified by the continuing build-up of evidence of economic damage. But there are two more specific gateways through which Labour could develop this strategy.

Supporting British (small) businesses

One is that, whilst Starmer has said this week, not entirely unreasonably, that businesses have now adapted to hard Brexit, so softening it would just create new costs and uncertainties, that really only applies to big businesses. It is SMEs which have suffered most, and would benefit most from softening Brexit. And here there is a certain irony, for Brexiters often claim that it is only big, global business that opposed Brexit, and that small businesses welcomed it. That was never entirely true, certainly of those small businesses that trade with the EU. But in any case what Brexit has revealed is that global firms, which have the resources to navigate new procedures, and which do not have national ties or loyalties, have most easily been able to undertake the relocations and supply chain adjustments it has necessitated.

That isn’t cost-free, for them or for the UK economy, but it is possible to a much greater degree than it is for SMEs. So it is SMEs, which are embedded in communities, localities and regions, and which are also crucial drivers of innovation and economic growth, which have paid the highest price. Yet, precisely because they have these qualities, they should be dear to Labour’s heart. And, crucially, they are exactly the kinds of British businesses that many leave voters (and many remain voters for that matter) want to see flourish, rather than the remote, global owners of casino capitalism: the ‘predator capitalists’ as Ed Miliband dubbed them in 2011, or the “people in positions of power [who] behave as though they have more in common with international elites than with the people down the road, the people they employ, the people they pass in the street”, as Theresa May put it in her 2016 ‘citizens of nowhere’ speech.

So, for Labour, a focus on improving the form of Brexit in order to come to the aid of British SMEs could be the golden thread to connect their remainer voters and those traditional Labour voters who supported leaving the EU, not to mention some of those who normally vote for others parties, including the Tories. In this scenario, the onus would be on the Tories to explain to voters, and especially to Labour-turned-Tory leave voters in the fabled Red Wall, why they refuse to endorse a cross-party agreement to shift Brexit from a form that disadvantages British local and family businesses to one that supports them.

The Northern Ireland Protocol

The other gateway for Labour to adopt this strategy is over the Northern Ireland Protocol (NIP). Things have gone rather silent this autumn, and it is not really clear what is happening. The NIP Bill has been paused. There was a report this week of a new HMRC database that may meet EU requirements by providing real-time information on which goods travelling between Great Britain and Northern Ireland are bound for the EU single market. That would also greatly assist the creation of the ‘green lane’ system the UK government argues for.

However, as with all the debates between 2016 and 2019 about ‘technological solutions’ for an Irish (land) border, it seems unlikely that there is any technical fix for what are ultimately political issues. In particular, if the Tory government continues to refuse any role for the ECJ it is hard to see a resolution, and yet a resolution has been promised, not least to the US, by April 2023, when the twenty-fifth anniversary of the Good Friday Agreement occurs.

It’s possible that something will be found that the EU and UK government will agree to, and which the Brexit Ultras and the DUP will accept. But at the moment that seems unlikely, suggesting another crisis, probably in the New Year. That would again be a route for Labour to announce the offer of a cross-party agreement on softening Brexit, not (just) for economic reasons but in order to resolve the NIP stand-off. If that, rather than simply economics, were to be the gateway, something like the Duff proposals would be the logical solution since these, unlike single market membership alone, would be necessary to resolve the NIP issue.

Again, the Conservatives would certainly not agree. But, again, the spotlight would be on them to justify a policy which, on their own admission, had failed and to which, in this scenario, they had no solution other than simply to break the NIP, and, with that, international law, whilst risking a trade war with the EU, something made easier for the EU to prosecute under its recent rule changes.

A chance for Labour to lead

Clearly none of this goes as far as many would want Labour to go, especially ‘re-joiners’. Equally clearly, because the Tories would not accept a commitment to it, it would not in itself yield a significant change of direction. But it would be a relatively low-risk way for Starmer to bring some honesty and realism to the debate about Brexit, a debate which is likely to intensify as the election gets closer.

Moreover, it would enable Starmer to provide some substantive leadership to the country in this debate, even whilst in opposition. For he would be inviting the Tories, as they contemplate electoral defeat, to participate in a new national consensus, and one which spoke to the clear public belief that Brexit has been a damaging mistake, yet without taking Britain back into the EU.

And, after all, as I outlined last week, many leading Brexiters are now saying that, simply by being out of the EU, Brexit is vindicated. So Starmer would be making a proposal which gave Brexiters that ‘success’, whilst in a genuine and convincing way showing how Brexit could be ‘made to work better’.

Again, it’s obvious that the Tories would refuse the offer and the proposal would come to nothing but, again, it would open the space for extensive TCA reform as a baseline position whilst identifying a route map for the longer-term, were the Tory Party ever to come to its senses, or if circumstances changed in other ways (for example, sustained and overwhelming public support for single market membership). In the meantime, blame for the economic damage of Brexit would be pinned firmly on the Tories’ recalcitrance.

The need for imagination

So I think there is a strategy for Labour – not perfect, because no strategy is perfect, especially starting from the horrible mess that Britain has got itself into over Brexit, and especially given the conundrums Brexit has always posed for the Labour Party. And it’s not even especially risky, electorally. It has the advantage of an honest acknowledgement of what Brexit has done to the country, of the need for the EU to agree if there is to be a different and durable Brexit, and of the way that the Brexit Ultra wing of the Tory Party is both the cause of the problem and the barrier to a viable solution.

That might not have been possible before, but the mounting evidence of Brexit damage, the change in public opinion about Brexit, the political chaos of the Tory government, and the utter discrediting of the Brexit Ultras by the mini-budget have all made it so. It’s a huge prize for Labour and for the country, replacing the lies and division of the Brexit years with honesty and a plan for consensus, and offering a path to repairing some of the damage of Brexit. It does not even require Starmer to have courage. Only that he has imagination.

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