ECONOMY

How does Labour move on from Brexit?

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Back during the summer doldrums, Brexit Briefing mused over whether, as the effects of the super-skinny trade deal with the EU started to land in the UK, the Labour party leadership might start to take the fight to the government over the quality of the deal it signed.

Both the shadow chancellor Rachel Reeves and the Labour leader, Sir Keir Starmer, had said that there would be “space to talk about Brexit and the Brexit deal” as the Covid-19 pandemic started to ease its total dominance over the news agenda.

Well, after a couple of days at the Labour party conference in Brighton, it has become clear just how limited that space is.

Despite the conference taking place as the petrol shortages reached their peak, with the papers full of pictures of folk brawling in the forecourts and front page demands for Boris Johnson to “prenez un grip”, the leadership remains clearly nervous of the ‘B’ word.

There are a number of reasons for this — some good and some less good — but all point to how long the road is going to be towards normalising relations with the EU, even for a centre-left party like Labour that is historically pro-European.

The good reason is that Labour has deeply internalised just how damaging it was to try to overturn the Brexit vote, and how deeply disrespected voters felt by that position.

As Yvette Cooper, the Pontefract MP, observed at a UK in a Changing Europe fringe event, “people felt their vote wasn’t being respected, and they voted [for Johnson in 2019] to ‘get Brexit done’”.

It is fear that the public should feel even slight slippage from this point (that Labour accepts the democratic legitimacy of the result) that keeps the leadership from making much more than a paper commitment to talking about Brexit.

Which brings us to the second, less good, reason which is that, as Professor Anand Menon observed at the same event, Labour has failed to lay the groundwork that would have enabled it to really attack the government over the current shortages.

As Menon acidly observed, you “didn’t need to be a trade economist” to know that the Trade and Cooperation Agreement (TCA) that Lord David Frost was negotiating after the Tories had won their 80-seat majority would be damaging for business, and proportionately most damaging in the ‘red wall’ seats where Tories made gains.

So while Starmer talks in his Fabian Society essay about his desire to “fix the holes” in Johnson’s “shoddy” Brexit deal, and accused the prime minister in his conference speech of having “no plan” for the aftermath of his deal, the reality is that the party has not established a credible record of criticising that deal ahead of time.

Nervousness about being seen to criticise Brexit itself meant that the party failed to land the political argument that, having got Brexit done, the Tories then electively did a deal that pandered to a narrow clique of backbenchers rather than the economic interests of voters.

The result is that now, with shortages at the pumps and a Conservative party getting itself in a tangle as it engages in a kind of labour market command economy dishing out visas by the 5,000, the Labour party attacks sound more desperate and opportunistic than they might have.

And with inflation rising, labour shortages likely to persist, logistics chains coming under deep strain ahead of the Christmas rush, there is plenty of further potential political mileage to be had from the effects of the Brexit deal.

As Cooper and others on the fringe argued, making political capital out of the cost-of-living crisis requires landing the argument that this is a “Tory cost of living crisis”, and one that the Johnson government has exacerbated by doing such a bare-bone trade deal with the EU.

Labour could argue many of the problems are self-inflicted. There are, after all, no queues for petrol in France or Germany.

Which leads to the third reason for Labour’s reticence on Brexit — that it still doesn’t have any clear ideas about how it wants, as Starmer put it, to “fix the holes” in the TCA.

This much was clear at a fringe event held by the Centre for European Reform featuring Lisa Nandy, the shadow foreign secretary, Jenny Chapman who shadows Frost in the Lords and Hilary Benn, the former Brexit select committee chair.

There was agreement among the triumvirate that Labour cannot fight the next election on a platform of rejoining the EU single market and customs union, while at the same time citing the party’s desire for an “ambitious, close and lasting” relationship.

“Get over it and move on, that’s what the public has said to us in 2019, but how we move on is up for grabs,” said Chapman, but that was about as much clarity as the discussion could bear at the current moment.

Challenged on what relationship, precisely, Labour would accept having ruled out the single market and customs union, the discussion got decidedly vague.

Nandy said Labour would “go to the EU and ask for some good will and flexibility” while Benn argued the Ukraine association agreement could provide a template — ignoring that that was a deal that was specifically designed for a state moving towards membership.

Indeed the entire discussion was redolent of the debacle over ‘Norway for Now’ when the Labour party indulged in much the same kind of cakeism that the Tories did, before Johnson opted for the hardest possible Brexit.

All three agreed that freedom of movement could not return, but wanted to create “as close a relationship as possible”; and a fix to the Northern Ireland protocol without joining a customs union with the EU.

To be fair, the woolliness is understandable given the scarring of the Brexit years, but it is equally true that talk of “bespoke” deals and “close relationships” shows how far Labour is, politically, from levelling with the public about the trade-offs implicit in the decision to leave the EU.

In the fullness of time, as Chapman observed, it is possible that the debate will shift — on immigration, on the need to trade more freely with our geographical neighbourhood and the need for a mobility chapter and more regulatory alignment — and that the public will accept that giving up some areas of control is worth the gains.

“I think that will be understood by the public and I feel the toxicity around this debate is subsiding around some of these solutions,” she said.

Possibly. But if Labour wants to convince voters down the line that it can deliver a better Brexit, it must lay the groundwork by staking out that alternative vision in sharp contrast to the ‘sovereignty first’ Tory version — or just as with the petrol shortages, it may find that it’s making the arguments all too late.

The make-up of Germany’s next government remains unclear after a historic general election. Join FT journalists on October 4 for a subscriber-only discussion on the outcome of the vote and its implications for Germany, Europe, and the rest of the world. Register free here.

Brexit in numbers

The labour shortages crisis draws attention to the external aspects of Brexit, and how the UK manages its immigration system after ending free movement from the EU, but ultimately the most decisive factor in whether post-Brexit Britain prospers is what happens internally.

With Covid-19 no longer absorbing the entire news agenda, the government’s focus will have to shift towards delivering the promised benefits of a freer, nimbler, more sovereign Britain that were plastered on the sides of the infamous campaign bus.

While Brexiters often say leaving the EU was a decision driven more by emotion than economics, part of the broader appeal of the project was that life would get better outside the sclerotic, stultifying Brussels project.

That, after all, is the very essence of the political brand of Boris Johnson, the politician who did more than any other to inch the Leave campaign over the line.

Which is why this week the FT has published an in-depth, five-part series running the rule over the key policy areas — net zero, skills, immigration and scientific R&D — that are the foundation stones of Johnson’s boosterish vision for post-Brexit Britain.

The overriding question is whether Johnson can join the dots on these individual policies which — as you can see in the chart above — overlap in many areas. In this case, training people to fix up carbon-leaky houses to help deliver ‘net zero’ will deliver proportionately higher benefits to those areas Johnson says need to be ‘levelled up’. 

The move to a points-based immigration system is also part of the plan. But as we have seen this week, and with failed projects like the botched Green Homes Grant scheme, these plans are easier to deliver in theory than in practice. With an election to come in 2024 or before, the clock starts now.

And, finally, three unmissable Brexit stories

Sarah O’Connor has written a lot about the UK’s labour market. In her column this week she reviews the government’s plan to alleviate lorry driver shortages and asks whether a temporary visa system will work.

It is hard to see how any rational Global Britain strategy can avoid Europe, writes Anand Menon, who says meaningful co-operation — particularly in areas of EU competence such as sanctions — cannot be built without significant engagement with Brussels.

After 25 years writing a column for the Financial Times the paper’s chief political commentator Philip Stephens is leaving. In his final weekly column he argues liberal democracies are threatened not by the rise of China and authoritarian regimes but by a lack of trust in the system.

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