Brexit Economics: The Shadow Chancellor Who Deserted The Ship

Now the by-elections are out of the way it is time to get back to Brexit, the political issue that will dominate not only this Parliament but that may well be a defining issue for a generation.

Diane Abbot is right when she points out that any political party with a foot in both the Remain and the Leave camp would find life difficult. Replace remain and leave with immigration and the economy and you have a more accurate reflection of the political dilemma facing Labour.

Immigration is, of course, an exceptionally difficult issue for any progressive Party to consider not least because the issues raised seem different across the regions of the country. Despite immigration being such a high profile concern Labour has not even started to debate the issue seriously, despite the All Party Group on Social Cohesion calling for a Commission to examine how a devolved immigration system might work. Clear, solid and principled policy will only come from pan-party debate, votes and brave leadership. As none of these factors are in place we can’t expect any clear Labour policy on immigration any time soon.

The economy should be an easier issue for Labour to headline on as ultimately it is should be our core issue. Talk to anyone for more than a few minutes and fears of Brexit quickly surface, even amongst those who voted to leave. Remember, the South Wales steel worker interviewed the day after the referendum? “I voted to leave but I didn’t think it would happen”.

It is very easy for broadcast journalists to find pensioners who simply don’t care about the economic arguments but dig a bit deeper and it is clear that many, if not most, of those of working age feel very insecure about their futures.

Fears for the future are understandable not least as the economic foundations of Brexit seem to change each week. During the referendum campaign Johnson captured headlines by proclaiming that, of course, we could stay in the single market. Other — harder Brexiteers — wanted out from both the single market and the customs union as soon as possible but these more extreme voices were never effectively challenged as the media focussed on the Johnson and Farage roadshows.

Since the referendum the government continues to shift its position, firstly, preparing to abandon the single market and subsequently showing itself willing to abandon the Customs union, preparing to trade if need be on World Trade Organisation rules and tariffs. As this mess unfolds Theresa May’s government becomes increasingly dependent on Donald Trump to seal a quick trade deal with the USA; they will have little choice but to snap up whatever is on offer from Trump. Some are optimistic as Trump opposed the Transatlantic Trade and Investment Partnership (TTIP) as did many progressives did in Europe, but Trump’s objections are on very different grounds. How easy do we think it will for British industry to get tariff free access for high value manufactured goods without us reciprocating by the further opening up our health and public services?

At least 50% of our major businesses feel that Brexit is already having a detrimental effect on the bottom line. Each week we see businesses — from financial services to manufactures — making it clear that they will re-consider their UK bases and future investment programmes if they are left with a ‘hard Brexit’. It is already clear that trading on WTO terms will be a disaster for the UK, making our economy uncompetitive in the global economy. Negotiating trade treaties to replace those we already have access by virtue of EU membership will take years.

So, given the seriousness of these economic concerns is seems extraordinary that John McDonnell is not addressing them. He is failing to articulate a clear commitment to the prioritising of the economy in the Brexit debate.

Many of those Labour MPs who voted to trigger Article 50 argue that there is still time to act as the shape of the final deal becomes clearer, yet in reality they are being lured into fighting on Tory territory. You can’t trust Labour with Brexit will be the continuing rallying call of this government. McDonnell needs to get wise; he can’t campaign for eighteen months on being a better party for Brexit and at the last minute throw up his hands and declare the whole thing is a disaster.

For Labour finding space in the media for an anti or doubtful Brexit message will be hard. This is why Labour’s position needs to be unequivocal and our priorities shouted out long and loud. The Vote on Article 50 was a disaster precisely because it abandoned the one opportunity for Labour to grab serious media time and to make the headlines. It would have allowed McDonnell the become our champion the protection of jobs and living standards from the outset.

Such a stance need not be automatically anti Brexit or against the popular vote. It is possible, we must suppose, that the government may pull off an acceptable deal with Europe even if this seems unlikely. However, there must be a real likelihood that the position we are left with after leaving the European Union is worse than that if we had remained in it. At the end of these negotiations, do we think McDonnell is really brave enough to take on the government, to argue against the very foundations of Brexit if that becomes necessary?

There is another reason why Labour needs to adopt a laser-like focus on the economy and on jobs and trade over time. Many of the electorate seem to have a poor knowledge of basic economic principles. Tim Shipman’s account of the anti European movement and the referendum campaign, _All Out War_, shows how — as the referendum campaign reached its zenith — both campaigns found that their focus groups were un-moved by economic arguments, they simply didn’t understand them. Labour will need to campaign long and hard to effectively inform voters. Education campaigns demand time.

So, whatever the eventual result of the negotiations with the EU Labour must campaign hard now if it is to have any chance of having a serious impact on public opinion. Labour’s ability to take on the Tories in the future will depend on it.

Labour’s position needs to be unequivocal. Labour must be a party prepared to defend jobs and prosperity and prepared to argue against the Brexit deal _if_the deal sells the country short. Labour should be clear now that there must be a second referendum on the final terms of the Brexit deal. May’s ‘take it or leave it vote’ will offer little chance for eleventh hour campaigns or reversals.

Labour’s pitch to voters needs to be blunt. To trade on WTO terms would be to impose a ‘tax’ on each job in the UK. If voters are uncertain about economic arguments they sure as hell understand the notion of tax. Whether you work in manufacturing, hospitality, financial services or technology, trading on WTO terms will make you and your employer less competitive in world markets. The low tax, low protection economy favoured by hard Brexiteers will decimate the public sector.

The policy and campaign positions discussed here are not designed to be anti Brexit, rather they are aimed positioning Labour as the protector of our economy, our jobs and our living standards.

In failing to step up to the mark John McDonnell has effectively gone absent without leave. Until he finds the courage to develop a clear line on Brexit and the economy, Theresa May will continue to dominate and Labour will continue to poll at record lows. Labour’s Leadership is already conceding the future of the post Brexit world to the Tories and the right.

Andy Howell
28th February 2017

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