Winner of the New Statesman SPERI Prize in Political Economy 2016

Monday, 7 May 2018

Theresa May’s perpetual Brexit and Labour's forsaken base.


Two pieces of recent Brexit news are that a majority of the ‘war cabinet’ outvoted May on the choice between two unworkable, and therefore unacceptable to the EU, proposals to keep the Irish border infrastructure free, and Labour plans not to support a Lords amendment to keep the UK in the Single Market (SM). I want to consider each in turn.

The Brexiters, and their followers who just want to be PM and are signaling to party members, have put their collective foot down over the Irish border. This could imply that May will have to finally break with the Brexiters. But first she will try to do what she has done since negotiations began, which is to find a fudge that is good enough for the EU and which just keeps the Brexiters on board. I have no idea if such a fudge is possible, but suppose she manages to achieve one and prevents a revolt from the rebels in her party, so we leave in 2019 as planned.

If that happens, we are in danger of having perpetual Brexit. A final deal cannot be fudged, and the reality is that no deal is possible that will keep the Brexiters happy and be acceptable to the EU. The stumbling block is the Irish border: the EU will not negotiate an FTA that requires a hard border, and the Brexiters will not accept either the UK staying in the Customs Union (CU) and SM for goods, or a border in the Irish Sea. A crunch point could come at the end of 2020, but to avoid that May will plead for an extension which the EU may grant. And so it will go on: perpetual Brexit.

In a strange way, it is in May’s interest for this to happen. No one thought she would last for more than a few years after the 2017 fiasco, but Brexit keeps her in place. The majority of the parliamentary party dare not allow her to go because they will get a Brexiter in her place, given that it is members who ultimately decide. Furthermore, the closer we get to 2022 the less the party will want a bust up over how transition ends, so she fights another election.

If she wins the 2022 election would that finally give her the confidence to do a deal with the EU and ignore the protests from the Brexiters? Two factors suggest not. First, the new intake of Conservative MPs could mean that she would lose a vote of no confidence over Brexit. Second the right wing press, with the election out of the way, might not hesitate to call betrayal if she agrees any kind of deal with the EU. Both the press and Brexiters, knowing that BINO was not at all what they had in mind, would be looking to break off negotiations with the EU and go for No Deal. If she gets an outright majority a deal that puts a border in the Irish Sea becomes possible, but I doubt she will take it or the party will allow it.

The underlying logic is simple. For Brexiters, transition is only bearable because they see it as a stepping stone to a hard Brexit. The EU will not negotiate an FTA without a border in the Irish Sea and no hard border in Ireland. These are irreconcilable positions, a point which the media have just not taken on board. So if May does fudge her way to agreement on the withdrawal bill, it means perpetual Brexit negotiations. Transition, or Brexit in Name Only (BINO), may not sound too bad, but it means never ending uncertainty because business cannot rely on this arrangement lasting decades.

One way to stop fudge is to force the government to break with the Brexiters. One of the difficulties Tory rebels will always have is that it is difficult to vote against a final deal that is fudge, because just as with the original Leave vote fudge can mean almost anything the fudgers want it to mean to get votes. As the polls I discussed here show, it is only by talking about something concrete that voters say wait a minute that was not my Brexit. Which is why votes on Lords amendments to the UK’s withdrawal bill to stay in a CU and (tomorrow) the SM via the EEA can be so useful. Conservative rebels think that with Labour’s support they could win both votes in the Commons. But while Corbyn has been persuaded to back the rebels on a CU, he appears unwilling to do the same on the SM.

I have talked a lot about Labour’s triangulation strategy. That strategy works best when all those who want something that is softer than Theresa May’s Brexit think Labour in reality wants what they want, whatever Labour might actually say. In a purely two party system with rational voters Labour can get away with disclosing that they really only want a slightly softer Brexit than May, because Remainers have nowhere else to go. But reality isn’t like that in two important respects: Remainers can vote for the LibDems or Greens (many thought the Greens would be hammered in the local elections - they gained seats), or they can not vote at all.

Until now, I think we have evidence that Labour has largely succeeded in being all things to all those wanting something softer than May, including those who want to Remain. But as crunch time comes closer this is going to be difficult to sustain. So what does whipping your Lords against voting for the EEA option disclose: that, as long as May is in charge, you are content to see the UK leave the Single market. [1] That might firm your support among some Labour leavers, but it pisses off all Remain supporters and those Leavers who want to stay in the SM.

I think this is a mistake, although I am happy to have experts tell me otherwise. I think it is a mistake because you will lose more votes from disillusioned Remainers than you will gain from reassured Leavers, even when you allow for where each are in parliamentary seats. I keep being told that this is the Tories Brexit, but the moment Labour enable it they become complicit. If car factories in the North East go because we leave the SM, they cannot claim this is not our fault because we abstained on a vote that could have prevented this. Voting to stay in the SM indicates economic competence, which always matters in elections and particularly matters for Labour. 

It also seems like a political mistake beyond votes and reputation. The theory seems to be that a vote to stay in the CU, which the Lords did pass with Labour’s help, will do all the required damage to May. But there are those who argue that such a vote can help her, by giving her an excuse to ignore the Brexiters and do a deal. The Brexiters will be furious, but what can they do at the end of the day, as May can defeat any vote of confidence because Conservative Remainers do not want a leadership election. Wth UKIP dead, they have nowhere to go. May, free of the Brexiters, might even achieve a final deal by 2020 (although crossing her own red lines to do so), and fight the subsequent election as the Prime Minister who got Brexit done.

Which is a long winded way of saying that a vote on the CU may not be enough. If Labour does kill a vote on the SM, they lose another chance to cause problems for May, and this time over an issue she really does not want to lose. Put simply by doing this Labour may be passing up a chance to do great, and possibly terminal, damage to May’s leadership. So the Lords decision looks bad in terms of votes, and bad in terms of politics.

Perhaps most importantly it is also bad in principle. Staying in the SM as well as the CU is the right thing to do if someone else is doing the negotiation. We need to stay in the SM for goods to avoid a hard border in Ireland, and therefore to get a deal with the EU. But the UK is really strong in exporting services, so leaving the Single Market for services is just another act of self harm. I have always been worried, since my time on Labour’s EAC, that the leadership underestimated the damage leaving the SM could do. And if truth be told the Leave vote was won on false pretenses, which means few voted Leave thinking they would be poorer. Which is why there is no mandate to leave the Single Market.

To those who say that Labour have to appease those who voted Leave in our traditional heartlands I would say this. Past Labour leaderships have for many years neglected their traditional heartlands, partly in efforts to appeal to the middle class and partly by embracing neoliberal ideas. They have subsequently tried to win back their traditional base through appeasement over immigration. It did not work then, and it will not work now with Brexit. You win Leavers back to Labour by focusing on the economic issues that matter to them, and not by votes in the House of Lords. 

Appeasement over Brexit is a mistake because Labour alienates its base, just as happened with austerity and immigration. It is time Labour stood up for its principles, which include better public services. Leaving the Single market will mean less money for public services [2], which is why 87% of Labour party members want to stay in the Single Market. Leaving the Single Market is a policy that should be opposed, not enabled.  

Postscript: The Lords amendment was passed by 247 votes to 218. 83 Labour and 17 Conservative peers defied their party and voted for the amendment. Only 3 Labour peers voted against the amendment. Jeremy Corbyn now has to decide whether he regards leaving the Single Market as more important than inflicting what could be a mortal blow to Theresa May. 

[1] We need to dispense with one red herring here. Abstaining does not mean neutrality. If the Lords amendment succeeds it puts the issue on the table, and Conservative rebels think they have the vote to support it with Labour’s support in the Commons. If it fails, it is less likely to be resurrected in the Commons. To say that the EEA option is not Labour's preferred option is irrelevant because they are not in charge and they have limited influence on the outcome. This vote is one point of influence, and they have gone for the worse option. 

[2] Whether they intended it or not, the writings of MMT seem to have convinced many people responding to me on twitter that lower UK GDP has no implications for the level of UK public services. Lower GDP, caused by lower labour productivity because Brexit diminishes UK trade, reduces the resources available to go to private and public consumption. The only way you can avoid less resources going to public consumption is to cut those going to the private sector. Nothing in that statement contradicts or can be changed by anything in MMT theory. If resources are underutilised they should be fully utilised, whether we are in or out of the EU. This is not about utilisation of resources. 



6 comments:

  1. Re: Footnote 2: Alas, the slightly more sophisticated argument is : Labour gov't with MMT will mobilise resources that are currently not (and never will be under Tories) and redistribution from wealthy to heartland Labour voters will keep Labour's prospects intact even during Brexit econ turbulence.

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  2. "Voting to stay in the SM indicates economic competence"

    Well it certainly demonstrates a commitment to neoliberalism and a desire to lock in the status quo. Not sure Jeremy and John are too keen on those propositions?

    "Lower GDP, caused by lower labour productivity because Brexit diminishes UK trade, reduces the resources available to go to private and public consumption."

    There are many ways to improve productivity you know, many of which have nothing to do with whether or not a good is pinged across a county border or a national border, and which are more difficult to do from within the Single Market straitjacket.

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  3. "the moment Labour enable it they become complicit"

    I think you missed that point.

    It was when Labour voted, under a three line whip, to trigger article 50 without conditions, thereby destroying the UK's negotiating position, making Brexit inevitable and leading to the fiasco we have now.

    The idea that Labour is pursuing some subtle triangulation strategy, when in fact it is where it is out of necessity because of the tension between the views of the leadership and the members/PLP is for the birds.

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  4. I agree she will fudge where possible, but ultimately I think we will crash out with no deal. The hard core will bring May down even if it means Jeremy Corbyn (I believe you underestimate the attraction of the Samson as a role model). The moderate middle have nowhere to go, Labour under Corbyn are as he has been will be to all intends and purposes anti EU (Thornberry was talking about a British deal today 5ht largest economy, the same sad delusion). So May choosing between a sure fire career ending 'soft / sane' BREXIT where Mail, Telegraph and Jacob Rees-Mogg kick her out or a Hard future chaos Brexit with a minor parliamentary rebellion but live another 24 hrs; faces no choice at all. She will save her skin, the country be dammed. If people are serious then the 'moderate' Tory party has to say EAA, CU minimum and Labour has to agree. They have to say they will bring May down over it and risk a Labour government (the moderate Tories). If not the asymmetry in threat is clear and so is the outcome.

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    1. Bringing May down carries no risk of getting Corbyn. The government, whoever is PM, will neither call an early election nor lose any vote of confidence. Why should any Tory / DUP MP want an election? The only other, just conceivable, route to a Labour govt before 2022 would be for May to resign & advise the queen to send for Corbyn. She is very unlikely to do this & even less likely to be listened to if she did.

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  5. It feels like both parties are going to be stress tested in the next few months.

    Reading Conservativehome website, the soft Brexiters have returned in the last few days to advance their cause, alongside the heavy presence of the Nouveau Riche-Mogg set.

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