Winner of the New Statesman SPERI Prize in Political Economy 2016

Tuesday, 25 September 2018

The Next Referendum Question


I wrote in January about the “unanswerable case” for a referendum on the Withdrawal Agreement (it is not a second referendum but nor is it a referendum on the final deal), and I have not changed my mind in the slightest. To say such a referendum would not be democratic is self-contradictory. I personally would be happy for parliament alone to call a halt to Brexit, but if MPs believe that to do so would be seen as undemocratic then we have to have a referendum on the Withdrawal Agreement (WA).

Does it bother me that this will not be a referendum on the final deal, because the WA is likely to be vague on the final trade arrangement? No, for two reasons. First a referendum on the final deal will be meaningless because we will have already left (something which I do think is undemocratic). Second, we now have a huge amount of information compared to 2016.

We now know that there are essentially two types of deal with the EU we can do. The first is some kind of FTA (free trade agreement), where Northern Ireland would stay in the Single Market for goods and Customs Union (the Irish backstop). Theresa May says that is something no Prime Minister could agree to, but more worrying from my point of view is that we would be a lot poorer as a result because we would do less trade with the EU and many of the third countries that currently have trade agreements with the EU. Those who tell you that getting our own trade deals with those third countries would be a piece of cake are the same people who told you that we held all the cards with the EU.

The second option is that we stay in the Single Market and Customs Union, but have little say in how those emerge. That avoids the need to implement the Irish backstop, which is why it will be the most likely option that May will agree to in the end. The economic hit from that would be much smaller than the first option, but we end up with substantially less sovereignty than if we stayed in. May would like to persuade the EU to leave open the idea of extending the backstop to the whole of the UK, meaning we stay in the CU and SM for goods only, but I think the chances of the EU agreeing to this at the end of the day are slim, and as geography is as important to services as goods we would be worse off as a result.

This choice was not clear to even experts at the time of the referendum, and it was certainly not clear to voters. The campaign hardly mentioned Ireland (and when it did, it did not imagine a backstop), and voters were told there would be more money for the NHS (there will be less), Turkey was about to join (it is not), EU immigration hurt the public finances (it does the opposite), we held all the cards in any negotiation etc. The Remain side may have exaggerated the immediate economic hit, but two years later GDP is around 2% lower as a result of the uncertainty created by Brexit and the fall in Sterling has in addition cost each household an average of £400 per year. That is fact not Project Fear.

So the case for a referendum on the WA is overwhelming, given all the extra information we have. That nearly all this information has been negative for Brexit is reflected in the polls. So what should the referendum question be? I do not think No Deal should be an option. No one seriously campaigned for No Deal in the first referendum, and only a minority of Conservative MPs (60?) support it. The obvious question to ask is do you want to accept the WA negotiated or do you want to Remain in the EU. This does not disrespect the original referendum vote any more than the 2017 general election disrespected the 2015 one.

John McDonnell on the Today programme yesterday (here, 2:10 hours in) seemed to suggest a question like do you accept the WA, yes or no? Some took the 'no' as implying No Deal, but I doubt that as Labour would be campaigning for no and have already said No Deal is not an option. Instead it would be a suggestion to reopen negotiations. But if Labour cannot force a General Election, and with May saying this is the best deal she can get, what is the point? If you think a no result would put pressure on the EU, see what happened after the Greek referendum in 2015. I think many voters would realise this, and just vote for the WA to speed the end of the paralysis in government that Brexit had created.

Not only does his suggestion make little sense, but it was politically disastrous, given the overwhelming support for a referendum that included the Remain option among Labour voters and members. Just after a composite motion had been agreed which is itself a compromise between Remain members and the leadership, he appears to undercut it at a stroke. The words he should have said came from Starmer later in the day.

So the referendum on the WA should be a simple choice between accepting the WA as negotiated or cancelling Article 50 and remaining in the EU. What about all those working class Labour voters in the towns of England and Wales who will feel betrayed if we stay in the EU? Those people were sold snake-oil, and you do not expose snake-oil by prescribing it on the NHS. Instead you make sure you enact policies that reduce the demand for snake-oil, and hopefully that is what a future Labour government will do.



8 comments:

  1. "Those people were sold snake-oil, and you do not expose snake-oil by prescribing it on the NHS. Instead you make sure you enact policies that reduce the demand for snake-oil, and hopefully that is what a future Labour government will do."

    What does it say for that future Labour government that the person who will become Chancellor himself believes in (as you put it) snake-oil? I might add that the NHS has prescribed homeopathic medicine for decades, and it took the current Tory government to stop it...

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  2. As a British expat living in an EU country , may I put in a plea for the views of the >1.2 million of us to be sought through a right to vote?

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  3. Ye gods! Just have a second referendum on staying in the EU. Now the public knows a lot more about what leaving means then at least they will be making an informed decision which is more than can be said last time.

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  4. I agree we should have a second referendum. But how are we to persuade our politicians to give us one. Their sole aim seems to be either a)to cling on to power or b)to win power. The consequences of Brexit apparently are of secondary importance to them.

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  5. A very succinct summary of the position, only omitting I think the dread prospect of the Brexiteers dream of a binding tie to US big business in the event of a Canada option.

    I think we all have to keep repeating this in simple terms till enough of our political leaders see it through the fog. That and a real commitment to radical rebalancing of the British economy once the Brexit distraction is out of the way.

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  6. Good article as always but could you please reference the "GDP is 2% lower 2 years on claim"? Not sceptical, but would be useful to see the analysis and I hadn't seen that before.

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  7. Where is all the certainty in this debate, how do so many pro EU people know what the rest of us don't know?

    The idea that there is an absolute majority for for remain is just as much mythology as the referendum itself, no one knows any more today than they did then.


    What we do know though is that the EU is a completely failed project, one of its main planks of support was that it would end the likelihood of war, but once again we see the rise of fascism in Europe, for exactly the same reasons as before the last war.

    Economically the EU has been a Neo-Liberal disaster and staying in is like the orchestra playing on the Titanic as it goes down.

    Blind loyalty to the Neo-Liberal agenda is the only reason for staying in and does not understand the potential offered by a left wing exit. It has been clear from the outset that the Tories sole objective is to scupper the negotiations and do a deal with Trump or any other Republican President. Neo-Liberal theology predominates in the USA and the said agenda has created a doorway for American corporations to just walk in and take over what is left of Britain's industrial base. The NHS is the classic case in point, even Theresa May has admitted that any trade deal with Trump will include the NHS.

    To ignore the economic and political direction we are heading in is negligent beyond belief, A left wing exit guarantees that Britain will use all it's resources to stabilise our economy and regenerate new industries that have no relation to the false dichtomy of the market.

    The other small point that is never raised, is that the EU has signed up to CETA trade deal which has all the hall marks of the TTIP deal and renders government liable to legal challenge - if it unilaterally decides to implement policies that a company regards as detrimental to its profitability.

    Rendering government subsidiary to big corporations in law.


    Not in my view a ideal situation for democracy, or am I just being naive.

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