Why Jeremy Corbyn Supports David Davis

by ukcivilservant

David Davis and colleagues are fighting for the right of future governments to implement trade and regulatory policies which would be incompatible with Single Market legislation. They believe – and Jeremy Corbyn believes – that this includes fighting for the right of a future Labour government to implement Bennite industrial democracy, nationalise and subsidise businesses, and to implement business-unfriendly policies which could be incompatible with Single Market and State Aid legislation. Clem Attlee saw the problem in the early 1960s:

clem_attlee

Kate Hoey touched on the problem, writing in the New Statesman as long ago as August 2015:-

“Here’s the real reason we can’t renationalise the railways –  Jeremy Corbyn and Andy Burnham have both pledged to renationalise the railways – but we can’t do that while we’re in the European Union”. 

Brexit is obviously attractive to those who wish to weaken environmental, worker protection, animal welfare, public procurement and other regulation. But many current Labour policies could also be incompatible with current EU rules, and in particular Single Market rules. Saving jobs via company rescues is generally prohibited, as are direct subsidies for companies with promising technologies. Here are some brief comments on extracts from the recent Labour Party Manifesto:-

“Labour will … bring key utilities back into public ownership to deliver lower prices, more accountability and a more sustainable economy. We will bring private rail companies back into public ownership as their franchises expire [and] reverse the privatisation of Royal Mail at the earliest opportunity.

Comment:- Nationalisation on its own would not be illegal under EU law.  French and Italian railways are state owned; Germany’s largely so. But the Treaty requires public/private neutrality, and prohibits subsidies, so Labour probably wouldn’t have the policy freedom that it would want. Similarly, the Postal Directives encouraged the introduction of private sector competition for, and then the privatisation of, Royal Mail. Note, however, that the non-EU European Human Rights Convention would require compensation to be paid to shareholders.

“Our industrial strategy will support businesses to create new, high- skilled, high-paid and secure work across the country, in the sectors of the future such as renewables.”

 “… we will put in place tight rules to ensure that investment is fairly shared around every region and nation of the UK. “

Comment:- Most direct or indirect subsidies would fall foul of State Aids rules.  Note, too, that WTO rules restrict subsidies.

“We will reconfigure funds for farming and fishing to support smaller traders, local economies, community benefits and sustainable practices.”

Comment:- Such support is often allowed at present, but Brussels scrutiny and permission would be needed.

“Labour’s vision is for the UK to lead the world with high animal welfare standards in the wild, in farming and for domestic animals.”

Comment:- The Single Market prohibits any attempt to restrict imports from EU countries with lower standards.

Remainers therefore need to recognise that there are no circumstances that could cause strong Brexiteers – in either party – to regret voting the way they did. A democratically elected Corbyn-led (or Farage-led) government outside the EU would in their view be infinitely preferable to remaining subject to the current EU consensus.

 

Martin Stanley

Understanding Regulation website

Civil Servant website

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