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19 September 2016

Rachel Reeves MP: Ending free movement should be a red line for Labour post-Brexit

The party has ignored the effects of immigration on wages for too long. 

By Rachel Reeves

Two days before the referendum, I visited the largest private sector employer in my constituency. I had spoken to many of the workers during the general election campaign a year earlier. 
Although the chief executive works with a community centre to recruit local young people, like many businesses they also hire many Eastern European workers. It was a tough audience, as many blamed the EU for the squeeze on living standards and most felt immigration was out of control. 
The people I met believed leaving the EU would mean less pressure on services and more money for them, because the downward pressure on wages would ease with fewer EU migrants.
The Remain campaign and the Labour party consistently refused to acknowledge that effect on wages, and more generally had little to say to working-class voters with whom we should have been able to communicate with.  
We didn’t offer solutions to those locked out from opportunities. And there was nothing to say about better skills provision to boost wages, or about how we would use industrial policy to deliver more secure, well-paid jobs.
I knew in my heart at lunchtime on the day of that visit that we’d lost the referendum. My head had told me – the economist – that we would win because the consequences of leaving were a risk voters wouldn’t take. But, by Friday morning, we knew the Leave campaign’s emotional message was stronger than the rational arguments of the Remain campaign.
A failure to acknowledge voters’ legitimate concerns on immigration meant we didn’t earn the right to be heard on other issues. We didn’t convince those who were uncertain or who didn’t vote at all. But we asked the question and so we must respect the answer.
So, how do we interpret the vote and what should the progressive left demand from the renegotiation?
The challenge for Labour now is how we get the best deal for working-class voters and ensure the best economic settlement. 
Ending free movement has to be a red line post-Brexit. Subject to that, we need the greatest possible access to the single market. This will of course involve difficult negotiations because the EU will not be able to offer better terms to countries outside the EU club. We therefore have to focus on our key priorities. 
We need tough negotiations to keep exports and imports tariff-free. We must also ensure the fullest possible access to the single market for the service sector. We also need to be clear about what the Chancellor must do to steer the UK through these turbulent times and build a resilient economy outside the EU.
This means urgent action to rebalance the economy and to ensure good quality and well-paid jobs in all areas of the country. The Chancellor must be prepared to capitalise on the ultra-low borrowing rates to help fund investment outside London. 
To address this, the government must first ensure adequate investment in infrastructure across the country – not just schemes like Crossrail in London.  The investment gap between London and the rest of the country is stark.  The capital received £5,203 more per head in capital investment than in the north-east in 2014. 
We must ensure regions in the north and elsewhere get a fair deal when it comes to investment in transport and other key areas like providing proper flood defences – crucial to businesses in my constituency.  
As well as environmental, energy and transport infrastructure, we should be doing more to get behind our digital economy.  
Our digital infrastructure is crucial, not just to tech firms but also to rural and home-based entrepreneurs. We have some of the slowest and patchiest broadband in the developed world. The network needs more investment to unlock the creative potential of all our citizens. 
Second, to ensure we can boost employment rates across the whole country, we must do more to support parents of young children who want to work. We should move towards a system of universal free childcare for all working parents of pre-school children.  The chancellor could fund this by cancelling his predecessor’s regressive and expensive cut to inheritance tax. 
Third, we will need to keep a hawk eye on employment protections and rights. The Conservatives have always been determined to strip away workers’ rights with their promised a “bonfire of regulations”, which our membership of the EU made it harder to do. To make certain we avoid a race to the bottom, we should continue to shadow the EU’s employment legislation where they make advances.  At the very least, this will be a vital check on the resurgent right-wing voices of the Tory Party who are now at the Cabinet table. 
Everything that has happened since people voted to leave the EU shows that we need to take these actions urgently. Just a few months after the result, we are seeing the impact of Brexit with firms cancelling or delaying investment, and jobs at risk. The Bank of England has cut the base rate and the Chancellor has been forced to promise to replace EU funding after our exit. The government needs a strong and sensible industrial strategy to rebalance the economy and protect jobs and growth across the UK.
All this must happen while we still take heed of the referendum result and negotiate our exit from the EU. Brexit must be a wake-up call for anyone who wants government by the people, for the people, of the people. And we on the progressive left must use this to help build a fairer and more inclusive model of economic growth.

This blog is based on a chapter Rachel Reeves MP wrote for the Fabian Society edited collection Facing the Unknown: Building a progressive response to Brexit, published today. 

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