Impressions of meeting with Michel Barnier in Brussels – John Mills

ON WEDNESDAY, 10TH JANUARY 2018

    Michel Barnier is an impressive person, tough and charming, who is evidently well on top of his Brexit brief and thus a formidable person to have on the other side of the table as the Brexit negotiations take place. He wants to get a deal completed but not at any cost to the EU27.

    His primary aim is to secure the integrity and security of the Single Market and the Customs Union rather than to search for a deal which is necessarily in the overall best interest of both the UK and the EU27. The notion that the EU27 may make substantial concessions to avoid economic pain is therefore very probably misplaced.

    While the best outcome from both the UK’s and the EU27’s point of view has always seemed to be for the UK to be outside the Single Market and the Customs Union but with a free trade deal in place covering goods and as many services as possible, this now looks as though it may be difficult to achieve. This is despite the fact that this is substantially the relationship the EU27 has with other countries as varied as Israel, Peru, Mexico, South Korea, Canada and the Ukraine.

    There are at least four major reasons why this is the case, these being:

1. The UK is starting from a radically different position from these other countries – essentially looking for a divorce rather than marriage, with all the baggage that this brings with it.

2. The UK is a much larger player in EU trade terms than any of these other countries, and thus potentially more disruptive if derogations are needed from the existing carefully balanced EU acquis.

3. The UK’s negotiation position has been gravely weakened both by the sequencing insisted on by the EU27 – dealing with money, Ireland and citizenship before trade – and by the result of the recent general election which has left no majority in Parliament for the WTO option which – although not the optimal outcome – is the only realistic fall-back position for the UK to have, without which the EU27 is left with all the cards in its hands.

4. Time is running short, although some extension of time by suspending Article 50 to create the proposed transitional period may help.

    In these circumstances, the most likely offer to the UK from the EU27 seems be free movement of goods and some concessions on services with the UK formally outside the Single Market and probably the Customs Union too but with the UK having to continue to accept nearly all the legal and regulatory obligations currently in place. These will almost certainly include substantial annual net contributions to the EU budget, free movement of people, significant jurisdiction by the ECJ, constraints on the UK’s capacity to negotiate trade deals on its own, and continuing membership of both the Common Agricultural Policy and the Common Fisheries Policy.

    An offer to the UK along these lines would probably be supported by all the EU27, led by Germany and France, but may not be acceptable to Parliament, let alone the British electorate. In these circumstances, preparing for the UK to fall back on WTO terms appears to be essential both to safeguard the position if no acceptable deal is presented to the UK, and to stiffen the UK’s negotiating position in the meantime.

    There may well be calls in circumstances where no acceptable deal is offered to the UK, for a second referendum on the UK’s EU membership, although probably only by a small minority of diehard Remainers. Even in the unlikely event of another referendum being held, current polls indicate that it would be unlikely to produce a different outcome from the one held in June 2016, thus confirming that Brexit is some form is likely to be inevitable.

    If the EU27 wants a deal with the UK it is therefore essential that this takes account of the political realities exposed by the 2016 EU referendum and current polls, which is that – if push comes to shove – the UK electorate would very probably be willing to opt for a clean break with the EU rather than finishing up being in a worse position than we were before Brexit started – with all the obligations against which people voted still in place, but with the UK having no say in how the EU develops in future.

John Mills 11th January 2018

The latest Labour Euro-Safeguards Campaign bulletin has just been published

John Mills, a long-standing member of the Committee of the Campaign for an Independent Britain, is also the Secretary of the Labour Euro-Safeguards Campaign, which produces a bulletin every two months on the Labour Party’s approach to Brexit.

The latest bulletin has just been published and can be downloaded here and previous bulletins are available from this page of our website.

Labour’s Brexit dilemma

Before the EU referendum, many people thought that the outcome, whatever it might be going to be, was going to cause far more problems for the Conservative than the Labour Party. At least up to now, this is far from what has happened. Only one Tory MP, Kenneth Clark voted against Article 50 on 2nd February 2017 while 47 Labour MPs voted that way, showing how deep the divisions within the Labour Party over Brexit are at the moment.

A number of key statistics tell the story. Of the 230 odd constituencies held by Labour at the time of the EU referendum, 70% had Leave majorities. If London and a small number of university cities are excluded, the ratio rises to about 90%. Some of these Leave majorities were very substantial. In Stoke on Trent, where one of the recent bye-elections was held, the Leave majority was close to 70%. Among Parliamentary Labour Party members, however, the picture is very different. There is still only a comparatively small minority of committed Leave supporters, and most of the seats with the largest Remain majorities had Labour MPs.

This is what has caused the Labour Party such huge difficulties. Clearly there was a democratic vote in favour of leaving the EU on 23rd June 2017 which needs to be respected. Many Labour MPs who were both personally strongly for Remain and who had substantial majority support for this position among their constituency electorates, however, thought that they had good reasons, in their judgement, for voting against Article 50.

The danger then is that the Party as a whole loses out heavily in the country at large because of its ambivalent stance on Brexit – and more polling evidence emphasises the scale of this risk. On the one hand, of the 9.3m people who voted Labour in the 2015 general election, just short of 3.5m voted Leave in the EU referendum and half of these people, about 1.7m of them, say that they do not intend to vote Labour again at least partly because they are unhappy with Labour’s policies towards the EU. At the other end of the spectrum, fervent Labour-leaning Remain voters are concerned enough about Labour supporting Article 50 to desert the Party and to vote for the Lib Dems, which is clearly what happened in the recent Richmond by-election at the beginning of December 2016, where Labour finished up with only 4% of the vote.

Labour is thus threatened with losing large numbers of votes both among its industrial heartland blue collar erstwhile supporters, because it is not Eurosceptic enough, as well as from metropolitan middle class people, many of whom do not want to leave the EU at all.  Of course, issues to do with Brexit are not the only reason why the Party is in difficulties, but Brexit is currently dominating political discussion in the UK at the moment, and Labour cannot afford to call this issue wrongly. So what can it do?

The by-elections held on 23rd February 2017 provide some guidelines. In both Copeland and Stoke Central Labour’s share of the vote fell. Obviously, other factors were in play apart from Brexit but both the loss of the seat by Labour in Copeland and the low turnout in Stoke suggest that many Labour-leaning voters away from London and university cities are upset by the Labour Party’s lack of enthusiasm for Brexit.

Furthermore, even though there was some good news from a Labour perspective, this needs to be treated with caution. The threat from UKIP turned out to be much weaker than might have been expected, no doubt mainly because the Conservatives have promised to do much of what UKIP supporters want. Nor did either the Lib Dems or the Greens do well. The problem Labour faces, however, is that, as the main opposition party, it has to win support back from the government and this is not what is currently happening. Instead, it seems that the Conservatives have been much more successful on Brexit in positioning themselves where the country wants to be.

What, in these circumstances can Labour do? Really, there is only one way ahead on Brexit which has any realistic chance of helping it to recover the electoral support it needs to become an effective opposition, let alone the party of government. It cannot afford to disregard the result of the EU referendum both for democratic reasons and because the Party stands to lose much more support from those alienated by Labour backing off supporting Brexit than it is likely to lose by failing to obstruct the Brexit negotiations, which has to be Lib Dem and not Labour territory.

What Labour needs to do, therefore, is to recognise that it has to accept the referendum result and then to play as constructive a role as it can on the Brexit negotiations. This will not be secured by tactical manoeuvring against the government. It will be achieved by supporting the government wherever it is acting in the national interest, while no doubt carving out a distinctive Labour position where there is genuine difference of view, for example of social legislation. 

Brexit is all too likely to dominate the political horizon for all the period running up to the next general election in 2020. Labour needs to use this period to rebuild the electorate’s trust in the Party on the EU – as well as much else.

Photo by DavidMartynHunt

June’s result must be respected

The result we achieved on 23rd June 2016 was a key victory but it is clear that this was not the end of the war. There are still key obstacles to be overcome before we find ourselves fully disengaged from EU membership.

The first issue is to ensure that we all agree, at least broadly, on what our negotiating strategy should be. Here, a broad consensus has emerged. Starting with trade, unless there are massive and permanent –  and thus very unlikely – derogations, we will have to be outside the Single Market, if we are going to secure control of our own borders, to reduce very substantially our payments to the EU and to be outside the jurisdiction of the EU’s Luxembourg Court. Ideally, we should then combine this with a Free Trade deal with the rest of the EU, which would keep our existing trade relations in place more or less as they are at the moment.

There is a school of thought which says that we would be better to be outside the Single Market but in the European Economic Area (EEA). This might be easier to negotiate but it could still leave us with obligations on free movement of labour, payments and jurisdiction which nearly everyone who voted Leave would like to avoid. Being outside the EEA – but in the European Free Trade Area (EFTA) – would therefore be a better bet, but this could be more difficult to negotiate. To secure a deal along these preferred lines, therefore, we may well need to be willing to walk away altogether from free trade with the EU, falling back on World Trade Organisation (WTO) tariff levels which are actually quite low – averaging around 3%. UK willingness to do this, however, if push comes to shove, may concentrate minds on achieving a free trade deal, which would make much more sense for everyone, within the two year period stipulated by Article 50 in the Lisbon Treaty.

Sorting out our trade relationships with the EU would very probably be the most difficult part of our Brexit negotiations, but it would leave a large number of other areas where co-operating with other countries in Europe on the right terms would make sense. Here our objective should be to ensure that there is maximum continuity but on the basis of inter-governmental co-operation rather than the UK being part of the EU’s federal project. As co-operation in all these areas is in everyone’s mutual interest, hopefully, reaching agreement will not be too difficult.

Having set the scene on where we would like to be, how are we going to make sure that we get there? There are significant obstacles in the way.  There is a large majority – probably between 75% and 80% – of MPs who were not Leave supporters. Some of them – ignoring the clear referendum result – are threatening to derail negotiations by opposing them on principle rather than in detail, either by calling for a second referendum or by having reversing Brexit as part of their manifestos for the next general election.  Others are preparing to oppose details of negotiations in such a way that the effect will be the same.

These are dangerous tactics, however, for those who want to win elections.  The outcome of the recent EU referendum was a decisive vote for Brexit. Those who feel they have the right to overturn the biggest vote ever in the UK for any proposition put before the electorate do so at their peril. A recent poll showed that 69% of those questioned thought that the decision taken on the referendum should be respected whether or not they agreed with it and only 22% were against.  Voters are not likely to be happy with either political parties or individuals who fail to support the electorate’s clearly expressed view. Eurosceptics should make sure that those standing for election know this.

The EU may work for the metropolitan elite – but it doesn’t for most working people

People generally vote in a way that benefits their own interests. It is with this in mind that we can learn a lot about the type of people who are supporting Remain versus Leave.

Who is in favour of Remain? Overwhelmingly, the metropolitan élite. They are the people who have done very well out of globalisation. They are in secure jobs earning high incomes and are more than content with their comfortable lifestyles.

The EU brings them all the advantages which the Remain side trumpets – plentiful opportunities for travel helped by cheap flights, the scope for living and working in different countries, opportunities for grants from EU financed organisations, and lifestyles enhanced by an inexhaustible supply of waiters, au pairs, plumbers and gardeners, eager to work hard and conscientiously for low wages.

The cost of the UK’s net contribution to the EU matters little to them because their incomes are high enough for it to be barely noticed. They are not that worried about democratic deficits in the EU because what they know of EU policy, they broadly support.

So it doesn’t come as a surprise that it is this same metropolitan élite who lead the charge for Remain. They are the people who write reports threatening the UK with catastrophe if we leave the EU and who set the tone for much of the bien pensant media coverage, much of it with a persistent if unconscious bias in favour or Remain.

Because the centre of gravity of our political system is so firmly in London, the leadership of all our main political parties is coloured strongly by the metropolitan view that opposition to our continued membership of the EU is clearly misguided, and so arguments in favour of Leave are barely worth serious consideration.

Who, on the contrary, is in favour of Leave? It is very largely those who have not done well out of the direction in which both economic and political developments have taken place in the UK in recent years.

It is people who have seen their incomes remain static in real terms for almost a decade. It is families who cannot get medical appointments because the NHS is so overstretched by our rising population, who cannot get on the housing ladder because house prices are so high, and who struggle to get their children into school places.

These people do worry about the cost of the EU because they are outraged to see huge sums being paid to Brussels while their local services are being cut. They don’t like mass immigration not because they are racists but because they suffer from what they regard as unfair wage competition as well as being squeezed out of services to which they feel entitled.

They have lost faith in politicians who they regard – too often with considerable justification – as not really interested in their concerns; politicians who don’t respect their culture and values, who think that internationalism is more important than patriotism, and who are not that bothered about watching incomes, wealth and life chances becoming more and more unequal. They don’t like the way in which their world is developing and they feel powerless to do much about it.

The result of the referendum on 23rd June is now projected to be on a knife edge – a long way from the relatively easy victory for Remain which was so often predicted a year or so ago. The main reason why Leave may win is surely that the Remain camp has been so poor at realising how strong the feeling among those favouring Leave has become and then basing their case for staying in on arguments which many Leave adherents find deeply unconvincing.

There is too big a disjunction between what seems obvious to those in the Westminster bubble and a big proportion of the population living outside the M25. The leaderships of both our major political parties have mounted cases for staying in the EU with which large numbers of their would-be supporters don’t agree – a majority in the case of the Conservative rank and file and a very large minority among Labour-leaning voters. This is surely very dangerous territory for both the Labour and Conservative Parties to find themselves in.

If we vote to leave the EU on 23 June, it will be very largely because of a passionately strong Leave sentiment which has been generated among Labour-leaning voters outside London; working people who have been unconvinced and alienated by what seem to them to be the self-seeking arguments put forward by the well-heeled London political class. This reflects, unfortunately, the biggest weakness of the EU across all the 28 countries now in membership: the lack of democratic endorsement for the way it is going.

To much too great an extent, the EU is the creature of a favoured élite who have done very well out of it. The price which it then has to pay is that it may not be able to stand up to the sort of democratic scrutiny which our referendum will provide.

The EU and the decimation of the UK steel industry

Photo by moleitau

If, as looks all too possible, 15,000 jobs go at Port Talbot as the Tata owned steel plant there closes – and another 25,000 related jobs go too – who is to blame?

Partly it is world-wide over-capacity, aggravated by Chinese production policies. A good deal of the blame can be attributed to Britain’s strong pound. Partly it is lack of up to date investment. But two factors have a lot to do with our EU membership.

One is the commitment strongly entrenched in all EU policies towards green policies associated with combatting global warming. There may well be risks associated with climate change but these need to be balanced against current realities. The EU commitment to combating global warming combined with opposition to fracking means that energy costs in the EU generally are about twice what they are in the USA and China. Since steel-making is very energy intensive, this is therefore a significant reason why Port Talbot has been vulnerable.

Perhaps more important than is the more general point about what countries should be able to do with their own problems, unconstrained by international pressures.  This is an issue of accountability. There are always difficult arguments to be considered about the extent to which governments should assist industries which are in difficulties – about whether this is really the right way to use public money as opposed to letting market forces prevail. The crucial question, however, is where these sorts of decisions should be taken.

Should they be taken at a supra-national level by unelected bureaucrats or should they be in the hands of those whom we elect to parliament?  Should they be taken at EU level or by our MPs at Westminster? There are arguments for and against nationalisation and assistance to industries in trouble and there will always be disagreements about what should be done. The crucial issue is where these issues are resolved and decisions on them are taken and how accountability for them lies.

The developments at Port Talbot are tragic. It seems terrible that the country which virtually invented the steel industry during the nineteenth century should find itself with almost no steel-making capacity left at all. If we are going to find our way to a more viable future, however, we need to be in a position to take our own decisions, to control what happens ourselves rather than to be told what can and can’t be done by Brussels. This won’t make the decisions any easier but at least the future will be in our own hands