Background Briefing: Jeremy Corbyn's Coventry Speech

Overview

Speaking today in Coventry, Jeremy Corbyn set out Labour’s current position on Brexit. He said Labour "would seek to negotiate a new comprehensive UK-EU customs union" but appeared to rule out membership of the Single Market, arguing instead for a “new and strong relationship” including a range of opt-outs and exemptions, including on state aid and procurement rules.

Our take on the speech is outlined below. For a wider discussion of the flaws in the left-wing case for Brexit, see our recent paper, ‘Busting the Lexit Myths’.



Top Lines

  • Labour’s commitment to a Customs Union with the EU is both welcome and long overdue. 
    This would help the economy, reduce pressure on companies to relocate overseas and go some way to avoiding a hard border between Northern Ireland and the Republic of Ireland. 
  • But the only sure way to protect these things and to get the benefits of Single Market membership is to be a member of the Single Market.
  • Insisting on exemptions from state aid rules risks leading to a chaotic no deal Brexit. The UK Government already can have an active industrial strategy, including providing support to companies, sectors and regions, and be a member of the Single Market, as other European countries have demonstrated.
  • Claiming that there will be some sort of ‘Brexit dividend’ if we leave the European Union is clearly absurd – the reality is that Brexit is already damaging the economy, and leaving the Single Market will do further severe harm.


Overview of the Speech

On the Customs Union

“Labour would seek to negotiate a new comprehensive UK-EU customs union to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland. But we are also clear that the option of a new UK customs union with the EU would need to ensure the UK has a say in future trade deals.” [Jeremy Corbyn, 26 February 2018]

Open Britain’s view:

  • It is welcome that Labour now supports remaining permanently in the Customs Union. Anything less would jeopardise the situation in Northern Ireland and put jobs at risk.
  • But on its own, remaining in the Custom Union is not enough to achieve this – we must also stay in the Single Market.
  • Labour must now commit to supporting cross-party amendments in Parliament to keep the UK in the Customs Union, and shift their position on the Single Market.


On the Single Market

“Labour would negotiate a new and strong relationship with the Single Market that includes full tariff-free access and a floor under existing rights, standards and protections.” [Jeremy Corbyn, 26 February 2018]

Open Britain’s view:

  • The only way to maintain the benefits of the Single Market, and to ensure there is a floor under existing rights and protections, is to remain within the Single Market.
  • Leaving the Single Market would cause an economic loss which would hammer tax receipts, threaten jobs and damage our public services.

On state aid rules

"We would also seek to negotiate protections, clarifications or exemptions where necessary in relation to privatisation and public service competition directives state aid and procurement rules and the posted workers directive." [Jeremy Corbyn, 26 February 2018]

Open Britain’s view:

  • It has been repeatedly shown that there is nothing within the existing Single Market rules that would prevent a Labour government from implementing the policies in its 2017 manifesto.[1]
  • However, Britain can have an active industrial strategy, including providing support to companies, sectors and regions, and be a member of the Single Market, as other European countries have demonstrated.
  • The EU is clear it will not sign a trade agreement with the UK that doesn’t apply restrictions on state aid. Insisting on exemptions from state aid rules risks leading to a chaotic no deal Brexit.
  • Furthermore, anti-subsidy rules would also apply even if we traded solely on WTO rules.


On renationalisation

"So we would also seek to negotiate protections, clarifications or exemptions where necessary in relation to privatisation and public service competition directives state aid and procurement rules and the posted workers directive." [Jeremy Corbyn, 26 February 2018]

Open Britain’s view:

  • The rules of the Single Market do not prevent public ownership. Indeed, national governments across the continent have ownership stakes in many sectors including energy, rail and water companies. 
  • It is also untrue to argue that Single Market membership would prevent nationalisation of the railways or of already privatised companies, or indeed of setting up new state-owned companies.
  • Contrary to some claims, compensation for nationalisation is a matter for UK law informed by the European Convention of Human Rights not EU Law.
  • So, the Single Market is not an impediment to a future Labour government renationalising the railways or other key industries.



Northern Ireland
“So Labour would seek to negotiate a new comprehensive UK-EU customs union to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland.” [Jeremy Corbyn, 26 February 2018]

Open Britain’s view:

  • Staying in the Customs Union is a necessary but far from sufficient step towards protecting the Good Friday Agreement and preventing the emergence of a hard border.
  • The only way to avoid a hard border on the island of Ireland is to continue to be part of both the Customs Union and the Single Market.

 

On a ‘Brexit dividend’

"We will use funds returned from Brussels after Brexit to invest in our public services and the jobs of the future, not tax cuts for the richest." [Jeremy Corbyn, 26 February 2018]

Open Britain’s view:

  • Claiming that there will be some sort of ‘Brexit dividend’ if we leave the European Union is clearly absurd – the reality is that Brexit is already damaging the economy, and has hit the public finances by around £200m per week since the referendum.
  • Leaving the Single Market will hammer the public finances further, with the Government’s own secret analysis predicting this could cost around 5% of GDP by 2033.[2]

 

[1] http://renewal.org.uk/blog/eu-law-is-no-barrier-to-labours-economic-programme

[2] https://www.buzzfeed.com/albertonardelli/the-governments-own-brexit-analysis-says-the-uk-will-be?utm_term=.toVbL1BLnQ#.lm88yEqyz5