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Labour has checkmated itself on Brexit

The opposition is giving up its only meaningful threat - blocking Article 50. 

Speaking yesterday on the economy John McDonnell gave a little more detail of the Labour Party’s position on Brexit. “It’s time we all were more positive about Brexit,” he said, in words that will have surprised few observers of Labour’s referendum campaign.

And he continued:

“We are insisting on full, tariff-free access to the Single Market for our businesses because this is the best way to protect jobs and living standards here.”

“Labour wants to see an ambitious Brexit Britain.

“And the British public know that only a Labour government can make an economic success of Brexit, as we are the only party prepared to make the hard choices, and invest seriously to grow a post-Brexit Britain we can all be proud of.”

This all sounds splendid. But what did he say about how he means to do it?

Well, he did clarify Labour’s position a little. “We must not try to re-fight the referendum or push for a second vote and if Article 50 needs to be triggered in parliament Labour will not seek to block or delay it," he said. 

So what avenues for influence does this leave left?

The government’s position has but one merit: clarity. It says the government – not Parliament but the executive – will negotiate the deal. And Parliament should not dictate negotiating terms. This is the necessary logical consequence of its decision to appeal the Article 50 case to the Supreme Court. And it is consistent with the position the government was briefing yesterday – that if it lost in the Supreme Court it would seek to introduce an "amendment proof" three line Article 50 Bill. Such a Bill might formally comply with the constitutional requirements outlined by the Supreme Court but is designed to deny to Parliament any substantive control over the outcome of Brexit.

Now, in a world where Conservative MPs are being blocked from having a say by their own government, how is Labour to deliver its vision of a Brexit Britain?

Well, if McDonnell is to be taken at face value, it won’t.

Labour has said it will not block or delay an Article 50 Bill. This would seem to have as its consequence that Labour will not seek to amend it either. Tabling Amendments to the Bill in the Commons or Lords will inevitably cause delay. And how, without the sanction of blocking or delaying a Bill that does not contain them, is Labour to compel the government to adopt its amendments? This stance would hand complete control of Brexit negotiations over to the government

But assume I am wrong.

Assume that Labour, with the help of the SNP and Liberal Democrats, succeeds in inserting into the Article 50 Bill its “Good Brexit” pre-conditions. How will Labour police their delivery?

To answer this question, we must wind the clock forward to just before March 2019, the moment the government returns to Parliament with a final deal negotiated with our EU partners.

If Labour’s Good Brexit preconditions are delivered, job done. But what about the – I would suggest more likely – situation where they are not? What then?

Logically there are only three possibilities. 

  • First, Labour waves the deal through anyway, having failed to police its objectives.
  • Second, Labour blocks the deal. We would leave the EU without one. Again, Labour would have failed to deliver its objectives.
  • A third possibility would arise if Parliament retained a residual right to block the deal without leaving the EU. In demanding that right Parliament would, in effect, be saying: “Unless you the government do what Parliament demands, we will either reject the deal and Remain, or put the deal to the electorate in a Second Referendum.”

The first two don't achieve parliamentary control. Only the third does. And so long as Article 50 is legally revocable – which is likely but will need to be resolved elsewhere – it is a meaningful threat. Indeed, it is the only meaningful threat. Unless Parliament issues it, Labour demands for parliamentary control are mere sound and fury. They signify nothing. 

But here’s the problem. McDonnell has explicitly ruled it out. “This means we must not try to re-fight the referendum or push for a second vote," he declared this week.

He’s checkmated himself. And that’s a pity. It’s a pity because it removes any opportunity for Labour to shape the terms upon which we leave the EU. And it’s a pity, because it’s just the wrong course.

Writing in the Financial Times earlier this month, I said (of the possibility of a Parliamentary vote on the final deal or a second referendum) this:

“No one knows what Brexit means. It is possible that, as its advocates have contended, it will deliver greater democracy and prosperity. But it is also possible that, as time goes on, the sunlit uplands foreseen by Boris Johnson dissolve into mere mirage.

Imagine this. It is November 2018. The promise trade deals have failed to appear. Unemployment and inflation are on the rise. The public mood towards Brexit has turned ugly, and so have negotiations with our biggest and nearest trading partner. In that world, any rational MP would wish that, back in November 2016, she had left ajar the door to remaining in the EU.”

If the evidence – as opposed to the cheap and unaccountable predictions – were to show that prosperity had deserted the country in anticipation of Brexit we would be mad to ignore it. Only someone scared of what the evidence will show tomorrow chooses to make a decision based on assumptions today.

This line of reasoning is powerful. Indeed, it is not easy to identify a coherent alternative. It is a great pity that John McDonnell has appeared to rule it out.

(This is a version of a longer piece appearing on www.waitingfortax.com today).

Jolyon Maugham is a barrister who advised Ed Miliband on tax policy. He blogs at Waiting for Tax, and writes for the NS on tax and legal issues. 

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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.