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2 June 2016

Do we want to drift towards a Tory Brexit, or make the case to end austerity across Europe?

On 24 June, we will still have a Tory government. That means if we vote for Brexit, we're also likely to be voting for more Tory cuts.

By John McDonnell

The referendum campaign so far has been mainly focused on the various petty ambitions of certain Tory MPs, rather than the greater ambitions we could achieve for our country. The media have sadly fallen into the trap of covering the
daily divisions in the Conservative Party over who will succeed David Cameron as prime minister. Labour activists know the answer to that question already – Jeremy Corbyn. Nevertheless, it has meant that the more positive case for staying in the EU has been almost crowded out.

This is why I have launched “Another Europe”, the positive Labour case to “Remain and Reform” the EU. However, I am not going to pretend that there is only a positive case. The undeniable truth about the referendum is that what is on offer is a Tory Brexit. On 24 June, we will still have a Tory government, because under the Fixed-Term Parliaments Act the Conservatives could change leader from David Cameron to Boris Johnson and still try to cling on until 2020.

This would be a disgraceful betrayal of democracy. But what over the past six years has suggested to you that anything would be beneath the Tories? And, regardless of who would be leader of their party, the initial trade negotiations following a Tory Brexit could resemble TTIP on steroids.

We know what they think of the Working Time Directive; can you imagine what other workplace rights they would trade away and try to blame on someone else? With global economic uncertainties combined with George Osborne’s economic incompetence, the UK is uniquely exposed to the risk of an immediate economic fallout from a Tory Brexit.

Osborne has already suggested raising VAT. The International Monetary Fund warned last month that in the event of a Tory Brexit: “Plans for additional medium-term budget consolidation may need to be developed to offset the longer-run adverse fiscal effects.” In plain English, if we have a Tory Brexit, then we have the likelihood of more Tory cuts.

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I want to see a reformed EU in which we make many of its institutions more transparent and democratic. For the first time in a generation, there is a growing coalition of socialists across the EU who can help us achieve this together. By choosing Labour’s “Another Europe” agenda, our country can stand with others across Europe to make a positive case to end austerity, offer a more humane response to the migrant crisis and protect and expand workplace rights.

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The case for migration

It has been a privilege over recent weeks to make the case for migration as part of the campaign to stay in the EU. There has been too much pandering to the Nigel Farages in recent years. In addition, those Tories who wish to remain in the cabinet but not in the EU will lack any credibility after making such arguments on immigration. How can they continue in government after advocating an immigration policy that goes against the fiscal targets set in the Budget in March?

We should make clear that we defend the right of others to come to work and live in Britain – just as we defend the right of those 1.8 million UK citizens living in other EU countries to do the same. I accept that some communities will be affected by a sudden increase locally in immigration. I should know as the MP for Heathrow Airport. This is why Labour has called for a Rapid Migration Fund to mitigate the overspills of immigration that can hit local services.

However, we cannot pander to the politics of fear regardless of the facts. The economic case for migration is clear and the evidence is overwhelming. Recent migration to the UK has had no impact on unemployment, nor on wages for most. In a few specific, low-paid areas of work, unscrupulous employers have tried to use migrant labour to drive down wages.

Yet the solution there is the same as it always has been: it’s trade unions. Research by University College London shows that recent migrants to the UK contributed £20bn more in taxes over the last decade than they used in services. If there’s a shortage of school places, or pressure on local NHS services, there is only one person to blame: George Osborne.

The case for migration, however, is about more than just the hard numbers. It’s about who we are and who we want to be as a country. This small island has always been open to the world. It was built by migrants, such as my grandparents, and that history of openness shows us at our best. I don’t believe we are a country that wants to slam shut the door and turn our back on our own history. And I don’t believe the desperate appeals by those campaigning to leave the EU to oppose migration will cut through.


Record of failure

For the past four decades, the IMF has been perhaps the greatest proponent of neoliberalism’s distinctive combination of privatisation, free capital movement and austerity spending cuts. Countries across the globe, most recently Greece and other eurozone members, have found themselves on the wrong end of what the IMF used to call its structural adjustment programmes.

Neoliberalism has had its critics for many years. I’ve been one of them. The evidence that either unrestricted capital movement or large spending cuts would lead to improved living standards – particularly for developing countries – has never been convincing. But we have now been joined by the IMF. An article in its in-house magazine reports that neoliberalism’s “benefits in terms of increased growth seem fairly difficult to establish when looking at a broad group of countries”. A high price was paid for this failure, the authors note, in terms of inequality and instability.

We’ve had our own version of neoliberalism, particularly under Osborne. His record of failure – failing to close the deficit, failing to bring down government debt, failing on manufacturing, failing on productivity – is a testament to just how badly misconceived his austerity programme has been.

The author is Labour’s shadow chancellor

This article appears in the 01 Jun 2016 issue of the New Statesman, How men got left behind