If a Hard Brexit is to happen, how could Labour harness it?

During what was already scheduled to be a rather incendiary week with the Inauguration of Donald J. Trump as President, another fire was stoked with the announcement by British Prime Minister Theresa May that one of her Government’s 12 negotiating points for leaving the European Union would be to leave the Single Market and perhaps even the European Customs Union; the so-called Hard Brexit scenario. Whilst this article will not delve into the minutiae of the proposed Brexit strategy (Theresa May’s 12 points can be found here), I will try to outline in it how I think that the Labour Party could utilise the UK’s leaving of the European Union for its end of achieving Labour Government again – a Government which for many, including myself, is viewed as desperately needed.

The prospect of Brexit poses significant problems for the Labour Party as it stands, primarily with the issue of immigration which I covered in a previous article The Power-Principle Conundrum. This issue was particularly debilitating for the Party at the last General Election, when immigration was marked as the primary issue for voters over the economy and even the National Health Service –  with 77% of polled citizens stating that they wanted immigration reduced. Now, at this point, I shall make clear that during the European Union referendum I was a proud and enthusiastic campaigner for the Remain campaign, specifically in the Labour In for Britain campaign. My ideal outcome of the vote was always going to be for the UK’s continued membership of the EU, but even I have come to recognise that the result simply cannot be glossed over as no doubt it would be more comfortable to do. The disillusionment and anger it represents would be lethal for a Party of the working class to ignore. To return to the main point however, Labour has always been weak on immigration, but now, if Brexit is to follow through, it can seize a unique opportunity through shaping a Hard Brexit for itself. If the UK sets itself on a path destined to leave the European Economic Area and thus Britain no longer has to abide by the principle of freedom of movement for citizens, then Labour should seriously consider backing a new immigration policy – a policy which appeals to both the working class, through limiting overall intake and ensuring that incoming migrants are not concentrated into already deprived urban areas and also which appeals to the middle classes and employers by ensuring that work visas are made available for the agricultural and hospitality sectors and more importantly, for the NHS. The fears of the electorate stem from a sense of their identity being eroded, of being ignored by the Establishment which for so long has been ignoring them, or telling them that they are not really concerned about immigration. This has led to an anger which has built up for years and if Labour can release it for its own ends, it will win the next election. (My article on English Identity covers this point to a greater extent and can be found here)

Steelworks at Redcar, North Yorkshire in 2009. The site stopped production in 2015 , with EU rules governing state aid being cited as a reason for their collapse (Credit: FiveTimes5)

As well as the obvious policy area which is opened in the form of immigration by leaving the EEC, there could be other economic policy areas which could be harnessed by the Party. Whilst it would be incorrect to label globalisation and the huge expansion of free trade as bad for the UK or demeaning to its people, there should certainly be capacity for a Government to support its own key businesses when the prospect of unemployment and the social disaster associated with such job losses outweighs the supposed benefits of ‘competition’. The aspect of the EU which limits the provision of state aid, which specifically can be found in the Treaty of the European Union and the Treaty on the Functioning of the European Union, makes clear that the idea of state aid is contrary to the ideas of the European Union as it distorts competition. However, the Commission allows state aid when it is ‘beneficial to the economy… [and] support[s] a wide variety of activities including research and development, environmental protection and aid for small to medium-sized businesses’. In 2015, a clear flaw in this policy from a social-democratic perspective was exposed. The SSI Steelworks at Redcar were in a state of economic strain and looked set to collapse unless a buyer could be found, unlikely due to the steel market at the time, or the Government immediately intervened to stop the potential 3,000 job losses in a community which was almost entirely reliant on the steelworks. Strictly speaking however, the Government would have been breaking EU law had it intervened to nationalise or even directly subsidise the company and eventually the steelworks did collapse following no deal being arranged. Although various other factors were at work, including the Conservative Government’s previously lacklustre response to failing industries, it does show the fact that the EU would be able to block what have in the past been seen as key Labour policies.

There are other policies too which are either achievable or made more complex with current EU regulations. Rail nationalisation has long been a cornerstone of Labour thought and is now official Party policy, but it may be the case that it will become impossible to re-instate the former state-monopoly of British Rail over the UK’s train infrastructure network if the EU’s 4th Railway Package is passed. Whilst there is some debate as to what the package actually entails, one of its objectives is to ‘opening of domestic passenger markets’ which would suggest that public rail companies such as SNCF or Deutsche Bahn would be legally obliged to compete with private contractors for rail franchises. From a Labour perspective, this is unacceptable. The sorry state of Britain’s railways are exactly a result of turning the former state monopoly into fragmented franchises which are exploited relentlessly by private companies. If however, the UK were not subject to such legislation, it could recreate British Rail in all its glory. Another policy, although currently not official policy, but one which was practised during the Labour Government of 1945-50 is capital controls. During the financial year of 2013/14, HMRC (Her Majesty’s Revenue and Customs, the UK’s tax collection authority) estimated that it lost £7.1 billion through tax evasion and avoidance. Much of this will have been lost through the siphoning of funds out of the UK through front companies or through complex legal loopholes arranged for corporations such as Starbucks and at present it is highly difficult to combat. However if capital controls were in place, all funds leaving the UK could be vetted to ensure taxes had been paid on them – even half of the £7.1 billion retrieved could go to closing NHS deficits, increasing police coverage or building social housing, but at present it is made impossible by EU laws governing the free movement of capital, another example of a socialist policy which is untenable unless the UK leaves the realm of European law.

This of course is all highly speculative. The UK may stay within the EEC, the EU may abandon the laws which govern the policy areas I have mentioned – any multitude of things may occur. I will also again establish that this article is not advocating a Hard Brexit – I truly believe that the UK’s place was within the EU and that all the issues I have raised could have been solved through co-operation with our European allies, but considering the circumstances, I believe it was worth pursuing how, perhaps, it could be the case that even a Hard Brexit could pay some dividends for Labour and the citizens of my country.

Thank you for reading this week’s article. What do you think about the EU? Does it prevent socialist policies being enacted? Can Britain do well outside of the EEC?