20 December 2018

The Labour Party is expected to vote against the Prime Minister’s Brexit deal when it returns to the House of Commons for the “meaningful vote” next month.  Indeed, Shadow Cabinet Minister Angela Rayner said on Question Time last week that there was “no circumstance in which [Labour] could support that deal.”

Labour has instead set out its “alternative” proposal, which includes:

  • A permanent customs union, to “remove the threat” of the Irish backstop
  • A “new, strong relationship with the single market”
  • Guarantees not to fall behind EU social and environmental protections

How different is Labour’s strategy to the deal currently on the table, and does it constitute a viable “alternative” plan?

 

There is no indication Labour could renegotiate the backstop

Labour’s key substantive criticism of the Withdrawal Agreement focuses on the Irish backstop, the ‘insurance policy’ that would come into force in the absence of a future UK-EU agreement which ensured an open border on the island of Ireland. The proposed backstop under the deal would see the whole of the UK stay in a customs union with the EU, with Northern Ireland integrated more deeply in the EU’s customs and regulatory regime.

Jeremy Corbyn has said this “lopsided” arrangement would “leave Britain with no say in a humiliating halfway house which we couldn’t leave without the EU’s permission.” He has also backed the DUP’s position, saying they oppose the backstop for “very good and sensible reasons,” and arguing it could create “a regulatory border down the Irish Sea.”  Labour’s Shadow Business Secretary, Rebecca Long-Bailey, has described the backstop as “a full stop” and warned, “We’ve got a deal on the table now that essentially puts Northern Ireland in a completely different situation to the rest of the UK.” Rayner also recently suggested that the deal “doesn’t deal with the Northern Ireland border issue.” But the backstop’s very purpose is to provide cast-iron reassurances on the border. If it did not, it would not have been signed off by the EU and the Republic of Ireland – nor would it have been backed, as it has been, by Northern Ireland’s nationalist and non-aligned parties. Indeed, the Social Democratic and Labour Party (SDLP), nominally Labour’s sister party in Northern Ireland, has expressed considerable anger at Labour’s opposition to the deal.

Despite these objections, it is not clear how Labour would seek to revise the terms of the backstop. Other than, perhaps, to strengthen the UK’s ongoing ties to EU social and environmental policy – something which would mean accepting greater rule-taking from the EU, and would therefore create a much more “lopsided” backstop. Neither is it clear that Labour’s plan could remove the need for the backstop, in the eyes of Brussels.

 

Would Labour’s permanent customs union avoid the backstop?

In February 2018, Labour announced that its new policy was to pursue a “comprehensive” and “permanent” new UK-EU customs union. They had previously opposed this policy, with Shadow Trade Secretary Barry Gardiner arguing a custom union would be a “deeply unattractive” end-state relationship.

Labour’s central argument is that its plan would avoid the backstop altogether. For instance, Rebecca Long-Bailey has said, “The backstop was installed to avoid a hard border in Northern Ireland. A permanent customs union would do exactly the same thing.” Elsewhere, during a recent House of Commons debate, Shadow Chancellor John McDonnell said, “The point we have consistently made is that we would not need the backstop; we want a permanent customs union and a relationship with the single market.”

In recent weeks, Labour figures have held this up as one of the fundamental elements missing from the UK-EU deal.

Jeremy Corbyn argued in a recent opinion piece,

A new, comprehensive customs union with the EU, with a British say in future trade deals, would strengthen our manufacturing sector and give us a solid base for industrial renewal under the next Labour government.

And Shadow Brexit Minister Jenny Chapman has said,

Because [Labour] would like a comprehensive customs union, the need for the backstop is less; it’s so unlikely it would be needed.

However, this raises a number of questions. Firstly, a permanent customs union would not address regulatory barriers between Northern Ireland and the Republic, which the existing backstop is designed to overcome. Corbyn is also wrong to argue that negotiating a customs union “would remove the threat of different parts of the UK being subject to separate regulations.” These are separate issues.

Secondly, it is odd that Corbyn has criticised the lack of a unilateral exit mechanism from the backstop under the current deal. After all, if a permanent UK-EU customs union forms the foundation of Labour’s proposal, why would Labour want to exit a backstop which provides for a customs union?

Equally, the Framework for the Future Relationship already leaves significant flexibility to pursue a long-term customs union with the EU – which is precisely why it has attracted opposition from some Conservative MPs. The Political Declaration states that the UK and EU aim to “build and improve on” the customs union set out in the backstop. A long-term customs union as the UK-EU relationship is therefore entirely possible under a future Labour government under the current deal, and Labour does not need to reject the deal to pursue this.

 

Demands for influence over EU trade policy are unlikely to be met

There are also some substantive issues with Labour’s proposals. As Open Europe has argued before, it is not clear that the bespoke customs union Labour would like is on offer from the EU at this stage. It is particularly unlikely, for instance, that the UK will retain a say over EU trade policy. Recent renegotiations of the Turkey-EU custom union show that consultation and technical coordination with the EU is possible. But this is not the same as a formal role for the UK as a third country; the EU is unlikely to countenance this, and certainly will not give the UK a veto over its own trade agreements.

This raises the question of whether Labour would still support a customs union if a “say” in EU trade policy was not on offer. Labour failed to support the ratification of the recent trade deal negotiated between the EU and Canada – would they really be comfortable agreeing to follow future EU trade policy in lockstep? What if the EU concluded negotiations on the US-EU Transatlantic Trade and Investment Partnership (TTIP) in the future, an agreement which Corbyn has previously opposed?

 

Would Labour’s “relationship with the single market” fundamentally differ from the government’s approach?

Labour have been far less clear about what level of integration it is seeking with the EU’s single market post-Brexit.

There appears little support among the Labour frontbench for a Norway-style agreement, where the UK remains in the EU single market via the European Economic Area (EEA) Agreement – though there are some prominent ‘Norway’ advocates on Labour’s backbenches. In June, the party was whipped to abstain on an amendment committing the UK to EEA membership, resulting in a three-way split among Labour MPs.

More recently, the Shadow Brexit Secretary Keir Starmer said:

I didn’t think [a Norway-model relationship] could really work very well for the UK, it obviously works for Norway… At the moment I’m not sure that it’s something that is very attractive.

Jeremy Corbyn has also called for “a new and strong relationship with the single market that gives us frictionless trade…while setting migration policies to meet the needs of the economy.” This is not consistent with the obligations of Norway’s relationship with the EU, which includes the free movement of people.

At the other end of the spectrum, Labour has ruled out a Canada-style Free Trade Agreement. Keir Starmer said in September that a traditional FTA would not meet Labour’s test to achieve the “exact same benefits” as the single market, and would fail to fulfil the UK’s commitments on the Irish border.

Labour is therefore seeking a very similar arrangement to Theresa May – an economic relationship with the EU somewhere between that of Canada and that of Norway. Its strategy to achieve this is purposefully short on detail because it faces the same challenge as the government – how to establish a close trading arrangement with the EU’s single market, without accepting free movement or wide-ranging rule-taking. And much like the Conservative party, Labour MPs – and the Labour leadership – is divided over what exactly the future UK-EU relationship should look like.

 

Labour has different priorities to the Government on workers’ rights, the environment and state aid

Unsurprisingly, Labour has different priorities to the government on so-called level playing field issues. While May’s Conservative party have made broad commitments to maintain existing social and environmental standards, Corbyn wants the deal to ensure “parallel” UK and EU environmental, consumer and workers protections in the future. Equally, while May has agreed to follow future EU state aid and competition policy, Corbyn’s Labour want more flexibility to allow greater state intervention in the economy.

There has been some suggestion that Labour’s differing ambitions would open up greater room for manoeuvre in negotiations with the EU. Shadow Attorney General Shami Chakrabarti said recently on Marr, “We would have a completely different atmosphere in the renegotiations conducted by us… because we want to stay in line with workers’ rights, environmental protections and consumer protections.”

However, while some EU member states will no doubt welcome stricter rules for the UK on level playing field issues, Labour’s proposals for the UK’s relationship with the single market still clash with the bloc’s red line on the indivisibility of the four freedoms. There is also no indication the EU would be willing to accept less binding provisions on state aid, particularly if Labour is seeking a permanent customs union. It would not be in the EU’s interest to grant the UK access to its markets without tariffs or rules of origin, while also allowing it the flexibility to undercut EU businesses with looser rules on state subsidies.

In any event, there would be nothing preventing a future UK government from voluntarily adopting similar rules to the EU on worker’s rights and the environment as they develop, though this would be decided by Parliament. Labour does not need to oppose the deal to keep the UK in line with EU standards – all it needs to do is win an election.

 

If Labour isn’t presenting a viable “alternative”, could it back the government’s deal?

Labour’s Brexit strategy has been politically clever, differentiating itself from the government with calls for a permanent UK-EU customs union and exploiting divisions within the Conservative Party. However, looked at closely, it is unclear how Labour’s “alternative plan” would deviate significantly from the path laid out under the negotiated agreement, particularly since a wide range of options remain open for the next phase of negotiations.

The existing backstop arrangement looks likely to remain largely unchanged in either scenario. May’s Brexit deal would see the UK remain in a customs union with the EU, at least until an alternative can jointly be agreed. Meanwhile, both May’s deal and Labour’s policy leave the question of market access and regulatory alignment largely unanswered.

So why does Labour oppose the deal at this stage? Much of this likely has to do with party politics. The grassroots group Momentum, for example, have put considerable pressure on wavering Labour backbenchers to oppose the deal. Meanwhile, recent YouGov polling suggests that public support for Labour could fall significantly to 22% – behind the Liberal Democrats – if it joined the Conservative party in supporting going ahead with Brexit. Equally, polling suggests almost six in ten Labour voters oppose May’s deal.

Labour has so far rejected what it calls a “false choice” between the deal on the table and a No Deal Brexit, and has understandably sought to use Brexit to create maximum political damage to the Government. Neither has Labour come out in strong support of a second referendum, though it has not ruled it out as an option. Its frontbench is clearly divided on this question – while John McDonnell recently suggested a referendum could be “inevitable” if Labour failed to secure a general election, Angela Rayner has said another vote would “undermine democracy.” It is in Labour’s political interest to keep the option open for now – according to YouGov, three quarters of Labour voters say the public should have the final say on the deal in a referendum.

Notwithstanding the potential for some changes to the Political Declaration and further assurances on the backstop, there are only three Brexit options available: No deal, the deal, or a referendum. When Labour MPs confront that choice with time running out, some of them may yet find they can live with the agreement on the table.

 

Further reading

Open Europe, ‘Reality Check: The false claims about the Brexit deal’ 

Open Europe, ‘The Proposed UK-EU Brexit Deal: An explainer’ 

Stephen Booth, ‘May’s deal isn’t dead yet,’ CapX