By John Pickard
More and more the representatives of business are expressing their anxieties about a so-called ‘hard’ Brexit or a No-deal scenario, with the possibility about being frozen out of European markets and the free movement of goods and capital. Dire warnings are being issued almost daily about the awful economic consequences of any failure to arrive at a deal with the EU over trade and access to markets. The Bank of England now expects business investment in 2019 to be 19% lower than it was before the Brexit referendum and the continuing chaos over Brexit has led to a dramatic slowdown in GDP growth in 2017.
The bosses’ union, the Confederation of British Industry, has warned that the Brexit “uncertainty” is damaging the economy, publishing data showing a 9 per cent drop in the number of jobs created by inward investment in 2016-17. The CBI director-general called for the UK to stay “inside the customs union and single market” until a final deal was in force. The latest (June) figures for trade are stark reading for British economists. The deficit is trade in goods rose to £12.7bn and while there was a 7.9% decline in exports to countries outside the EU, goods exported to the EU rose by 2.7%. “The UK is becoming more and not less dependent of the EU”, commented economist Edward Hardy at World First (Guardian, August 11).
The barons of big business must be tearing their hair at the mess their supposed political representatives have put them in. In July, a City of London delegation went directly to Brussels with a secret blue-print for a free-trade deal on financial services. This move was independent of Government but had the unofficial backing of senior Whitehall figures. Quite clearly, the financial sector does not trust the official negotiators who even exclude the Financial Conduct Authority from their deliberations and there is a very real fear that thousands of jobs will have to move to Frankfurt or Dublin.
At present, the City of London has “passport” rights allowing banks and fund managers to do business freely across Europe. All that is in jeopardy if the UK is outside the single market or customs union. Dozens of banks have already made tentative steps to set up offices in Dublin or elsewhere in Europe. But the movement of tens of thousands of jobs, IT logistics and office facilities to Europe cannot possibly be their preferred option, given the enormous disruption it would entail and the possibility of losing the pre-eminent position of London in European and World finance.
A few days after this unofficial mission to Brussels in July, a delegation of business and City representatives met David Davis, the Minister for Brexit, to lay down the law. The business delegation consisted of 34 chief executives of FT100 companies, as well as representatives of the CBI, the Institute of Directors and the Engineering Employers Federation. It must be unprecedented outside of the Tory Party conference for such a high-powered delegation to make representations to a Tory minister.
Although Davis announced afterwards that there was no change in policy, the business lobby has clearly begun to have some effect. The Government was forced to set up a ‘business advisory group’ to liaise over Brexit, something welcomed warmly by the Financial Times editorial writers. “The possibility of a ‘cliff-edge Brexit”, the FT, editor wrote, “is inconsistent with the strategic planning that success in business requires”.
The business leaders have set out a Brexit policy that has now, in effect, become the policy of the Chancellor Philip Hammond. This is based, as the FT put it, more on “economic well-being” than on “ideological purity on national sovereignty.” Hammond and his supporters in the Cabinet, cheered by business, are pushing the Government towards continued membership of the customs union and the single market during a transitional period that would last up to three years after Brexit. It would mean, in effect, that nothing would change for at least three years, while Britain was formally outside the EU.
The cost of this arrangement would mean paying EU commitments, allowing free movement of labour and even accepting the authority of the European Court of Justice (ECJ). It would also mean continued membership of single-issue agencies like Euratom, the European Safety Agency and the European Medicines’ Agency, as well as others in telecoms, power and aviation.
Accepting a transition period of three years, with Britain having all the appearances of being in the EU, while being unable to participate in any policy-making, is a price that business is prepared to pay, but it is provoking a crescendo of mutual sniping and friction between the two wings of the Cabinet as the hard Brexiteers begin to bite back. Ministers like Liam Fox are determined that there cannot be free movement of labour, any ECJ jurisdiction or any sizeable payments to the EU.
The result is that the Tories’ Brexit strategy is looking increasingly like disarray. Even supporters of the Leave campaign are breaking ranks and criticising the supporters of a ‘hard’ Brexit. Dominic Cummins, one of the ‘brains’ of the Vote Leave Campaign, and a former special adviser to Michael Gove, reacted vehemently to Theresa May’s announcement that Britain was going to leave Euratom, tweeting, “Government MORONS says they’re withdrawing from Euratom. Near retarded on every dimension,”
Another commentator, John Gapper, writing an opinion-piece in The Financial Times, bemoaned the detachment of modern Tory leaders from business and industry. Boris Johnson, he pointed out, studied classics, Dominic Cummins and Michael Gove English…all at Oxford. There is a “gulf” he argued, between theory and practice, “leaving businesses pleading for the Government to recognise that they face potentially disastrous outcomes, and to slow down…the only hope is that pragmatism can be restored, but time is short”.
Another former Brexiteer, James Chapman, has also broken ranks with his former employers. This man actually worked for David Davis in the Department for Exiting the European Union for a whole year and was the political editor of the Daily Mail. Now even he has come out and argued that Brexit is a “catastrophe”, urging the formation of a “new party” of Right-wing Labour MPs and Tory supporters of a ‘soft’ Brexit.
A Finished Recipe for Splits in the Tory Party
Despite the ‘joint article’ by Liam Fox and Philip Hammond in Sunday’s Observer – no more than window dressing to paper over the cracks – the general situation looks like a finished recipe for splits in the Cabinet, possibly leading, further down the line, to resignations, most likely of hard Brexiteers like Liam Fox and Grayling.
But if these hard Brexiteers are pushed out of the Cabinet, it will lead to a serious political crisis and possibly a significant rebellion among hard Brexiteers in the Parliamentary Tory Party. The prognosis for the health and well-being of a united Tory Party does not look good.
There is a serious economic and political crisis looming for British capitalism. Leaving the single market and customs’ union, by means of a ‘hard Brexit’ will be disastrous for business, for profits and it will have a dramatic effect on living standards and jobs. It is not the preferred option of business. But salvaging a solution that is even remotely in the interests of its business pay-masters will inevitably lead to historic splits in the Tory Party. Either way, it will lead to the greatest political crisis for Conservatism in modern times.
In the past, a Labour Party in opposition was a useful ‘second eleven’ for the ruling class and supporting the election of a Labour Government might have been the solution favoured by big business when faced with an economic crisis. In the days when the Labour Party offered no threat to the fundamental interests of rent, profit and interest, the capitalist class could call on the Labour leaders to take the helm for a few years. Labour would then ‘repair’ the economy by using public finance to promote infrastructural investment (and private profits) and by urging workers to make ‘necessary’ sacrifices. At a later stage, Labour would then be undermined, as Government popularity fell and Labour voters became disillusioned and disappointed.
The problem today is that the Labour Party has an official programme that is anti-austerity and a manifesto chock-full of reforms, including commitments to nationalisation. The Party manifesto and the campaign of Corbyn – “For the Many, not the Few” – have raised expectations to a higher level than at any time in the recent past.
Owen Jones, in an article in the Guardian (August 10) quoted the Sunday Times political editor Tim Shipman as saying that Theresa May was hanging on to power “because the Tories are genuinely fearful of a Corbyn government to a degree that goes far beyond usual opposition to Labour”. Jones also raised the possibility (we would say, certainty) that the Establishment in the Civil Service and the organs of the state would vigorously oppose a Corbyn Government. He quoted an unnamed but “prominent” Labour figure, (now back-bencher) who asked Jones, “Do you really think the British state would just stand back and let Jeremy Corbyn be prime minister?”
Owen Jones correctly described the enormous pressure that would be put on a Corbyn Government to water down its anti-austerity policy. “Civil servants”, he writes, “will tell Labour ministers that their policies are unworkable and must be watered down or discarded.” Apart from the pressure from Big Business and Finance, (which he barely mentions), there would also be the huge campaign of vilification of Labour from the right-wing media. “…those media outlets that cheered on Brexit and accused Remainers of hysteria about the consequences, from day one of a Labour government will portray Britain as being in a state of chaos. Every drop in the pound, every fall in the stock exchange will be hailed as a sign of economic chaos and ruin. Demands for U-turns and a moderated agenda will become increasingly vociferous and backed by certain Labour MPs. The hope will be to disorientate, disillusion and divide Labour’s base.”
But a key element in the political process, not mentioned by Owen Jones in this article, is the incipient split in the Parliamentary Labour Party. Just as Tory MPs are irreconcilably split, so the Parliamentary Labour Party (PLP) too is divided between those (the minority) who support Corbyn’s anti-austerity programme and the rest who have an outlook and philosophy fundamentally the same as the Tories. The right wing of the PLP, therefore, is being actively courted for a possible split, in support of the ‘soft-Brexit’ wing of the Tory party, in the name, of course, of the “national interest”.
Right-wing Labour MP Chuka Umunna and Tory MP Anna Soubry, a former business minister, have already formed a cross-party group to promote a soft-Brexit. Umunna’s little revolt against the Labour leadership in Parliament just before the recess, when he was supported by 50 Labour MPs, was a message directed at the Tory benches and big business, not Labour’s rank and file. “I am with you”, he was telling them. He told the Financial Times political editor that his cross-party group was about MPs “putting aside their differences and putting the national interest first.” This was echoed by many right wing Labour MPs, most recently, Wes Streeting, MP for Ilford North, who said that the Brexit issue needed “enough MPs with the courage to put country first if all fails”
It remains to be seen if Streeting’s and Umunna’s idea of what is in the “national interest” would coincide in the slightest with the interests of workers, but with Tory friends like Anna Soubry we can be sure it will match exactly the interests of big business.
There is a growing list of right-wing Labour MPs and peers calling for some form of collaboration with the Tories on the Brexit negotiations. Just after the General Election, with Theresa May seriously weakened by the Corbyn campaign and Labour gains, “Labour” peer and former minister under Tony Blair, Lord Mandelson offered her a lifeline. “There are Labour MPs”, he wrote, “who want to work in the national interest and will support her [Theresa May] if she does the right thing for the country…Mainstream Labour MPs, who worry about the impact of the continuing Corbyn revolution on centrist voters, should be prepared to stand by the wounded PM, and likewise she should welcome their approach in the national interest”.
Peter Mandelson, if he ever had, has no interests in the well-being, welfare and future of working class people. This is the man who admitted that he tried to do “a little bit every day” to undermine Corbyn. He may have acknowledged the hugely successful campaign waged by Jeremy Corbyn in the General Election – no thanks to people like Mandelson sniping relentlessly from the side-lines – but like the big majority of right-wing Labour MPs, he has not changed his outlook.
For the moment at least, most right-wing Labour MPs can see which side their bread is buttered on and they understand that Jeremy Corbyn, far from being “unelectable”, is the best guarantee they have of continuing their Parliamentary careers. But these “Labour” representatives are nonetheless vehemently opposed to a mass membership and a radical Labour Party and at some point in the future, they would rather split from the Labour Party than follow an anti-austerity agenda which they perceive as being anti-business. The crisis around Brexit might just give some of them the pretext they need to abandon Corbyn and Labour…in the “national interest”, of course.
Whether there is a split in the Parliamentary Labour Party before or after another general election (or both) is secondary – the main point is that the political complexion of the big majority of the PLP points to a split from the radicalised rank and file at some point.
What is a Socialist View on the EU?
From the point of view of capitalism, a single market, without trade or customs barriers, is economically progressive. But socialists have never put their faith in any ‘market’. The so-called ‘free’ market is organically incapable of providing the basic necessities of life for working class people: health, education, housing, jobs and material benefits. The ‘market’ guarantees a permanent shortage of homes. The internal ‘market’ of the NHS simply opens the Health Service to exploitation by private companies. The ‘market’ has soaked the British railway system so it is more ramshackle and more subsidised by tax-payers than ever before. And so on, and so on. The ‘market’ has never benefitted workers.
Within the EU, the rules of the single market are designed from top to bottom as a means to maximise the interests of profit and private investors, ahead of and above the interests of public and state-owned utilities and institutions like the NHS. It is the market and private ownership of the big companies and finance houses that are barriers to meeting the economic needs of the working class.
While they have enjoyed lavish life-styles with private jets, luxury hotels and expense accounts, the top officials of the EU commission think nothing about pauperising millions of working class people in Greece and elsewhere. Given conditions of economic crisis in Britain, they would have no compunction about massively cutting living standards here too.
Like the private ownership of the means of production, the national interests of each separate capitalist class in Europe stand as a barrier to the development of society. Despite the attempts of the biggest corporations to straddle borders and trade globally, the separate political and economic interests of each national capitalist class cannot be wished away. The long-term perspective for the EU is not the further integration of national states to form a European super-state, but, on the contrary, for increased tension between separate national capitalist interests and the gradual disintegration of the European ‘ideal’.
Socialists would argue that the focus of Labour’s policy during the Brexit crisis, therefore, must be a class policy, based on the interests and needs of working class people in Britain and internationally. Labour must champion the defence of workers’ living standards across Europe. The so-called ‘social gains’ of EU membership, like environmental and food standards and rights at work, have not been given on a plate by Eurocrats but are the direct gains or by-products of the struggles and pressure of the labour movement across Europe. Labour must use the Brexit debate in Parliament and in the media as platforms to demand that there is no reduction in workers’ rights and no reduction in food and environmental standards.
Labour must defend the right of the free movement of workers and for the defence of the full legal and social rights of EU and other citizens already in the UK. Crises in education, housing and health are not the result of migration, but of decades of neglect and the policy of austerity and cuts in public services. There can be no support for the nationalist demagogy that puts “British control” of borders and “British control” of a judiciary at the focus of Brexit discussions.
Labour must also take a lead in defending and extending workers’ rights in Britain and across Europe, so that one group of workers do not have their wages and conditions undercut by another group. Labour cannot support Brexit on Tory terms!
Above all, Labour must raise the fight for an alternative to the EU treaties that set up systems, rules and regulations in the interests of business. Labour must reach out to other socialist and labour movement organisations in Europe, through joint meetings and conferences, to advance a Socialist alternative, with its centrepiece being the public ownership of the big national and international monopolies. The only real answer to the challenge of living standards and austerity is the organisation of a socialist plan of production on a European scale. Labour cannot support the petty nationalist Brexiteers; but neither can it sow illusions in the fake benefits of EU membership.
Labour’s policy must be
- No to a Tory Brexit,
- No to a big-business-oriented EU and
- Yes to a Federation of European Socialist states.