Labour has a chance to keep the United Kingdom in the single market – we should take it

It’s not guaranteed that we can win the vote to stay in the EEA, but we should at least try, says Pat McFadden.

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Representing a heavily Leave-voting constituency in the Black Country, I understand that working class disaffection was a big driver behind the decision to leave the European Union. People felt that too often things had been done to them, instead of for them or with them; and they wanted a better deal and a better chance for the future.

There is no simple “EU or non-EU” solution to these discontents. Instead we need a plan to address the sense of unfairness and lack of opportunity that afflicts much of the country – something on the scale and ambition of a new Marshall Plan for working class communities. 

Yet the Brexit question is central to our ability to deliver such a plan, because Labour must always be concerned with jobs, prosperity and economic strength.

In opposition, you get very few chances to shape events. But now and again, a chance presents itself. There is one such opportunity next week: when the Commons votes on whether or not to remain a part of the European Economic Area after Brexit.

Staying part of the EEA would mean, in effect, staying in the single market for both goods and services.

We would not be part of the EU institutions, nor be subject to an ever closer union, nor to common EU defence policies; but economically we would be staying part of the European economic system.

It would mean no need for extra paperwork for exports and imports. It would guarantee that common standards would be adhered to, covering both goods and our world leading service industries (which are not covered just by staying in a customs union). These common standards would also mean no diminution in workers’ rights, consumer standards or environmental standards – all things Labour has rightly prioritised. There would be no need for businesses and jobs to relocate to the EU.  And, together with Labour’s support for membership of a customs union, it would mean no need for a hard border in Northern Ireland.

The economic consequences of staying in the single market rather than going for a free trade agreement are huge. The government has estimated – in the assessment that Brexiteers love to hate – that the difference to public borrowing of an EEA type agreement and a free trade agreement is around £38bn a year. 

This is £38bn a year that could make a substantial impact in addressing some of the legitimate grievances that led people, many of them in working class constituencies, who felt they did not get a decent chance from the current economy, to vote for Brexit in the first place. 

£38bn a year that could pay for significant improvements to schools, for more apprenticeships, for better infrastructure. It could provide support for industries of the future, in which Britain could excel, or boost the research capacity of our universities. It could pay for more police on the streets to help communities feel safer, or build much-needed houses.

Or it could be used for none of these things, and instead frittered away on the costs of the extra borrowing needed as a result.

Politically, this option has a possible, though not guaranteed, chance of majority support in the Commons. Twelve Tory MPs have tabled an amendment to the Trade Bill supporting the EEA. If the Labour frontbench supported the Lords EEA amendment to the EU Withdrawal Bill – together with SNP, Liberal Democrats and some Tories – there is a fighting chance that parliament could actually shape the kind of Brexit that would boost jobs, prosperity and living standards. Even if they didn’t defeat the government, there is a strong chance that the substance of the argument would turn support for their argument.

Yet rather than back this, the Labour frontbench has tabled an alternative to the EEA amendment.  This amendment is being sold externally to the press as a big policy shift to staying a part of the single market by an alternative route, while simultaneously being sold internally to Labour MPs as a way of appealing to those who don’t want to remain part of the single market. It cannot be both of these things.

In truth, the frontbench amendment is not a big policy shift. It is hard to escape the conclusion that it is a device designed to kill the chance that parliament has to keep the UK in the single market.

Why would the Labour frontbench want such an outcome?

It is claimed that the amendment offers an alternative route to the same end – staying part of the single market. If that’s the case, the only difference between the two is that the EEA agreement has existed and operated for over 20 years, while no such free trade “single market” agreement exists with any other country. And EU spokespeople have been consistent in saying none will be on offer. Claiming to be able to secure the current level of market participation through a free trade agreement is a very similar argument to the one the Tories have been making since the Brexit vote.

It is said that being part of the EEA will make us rule-takers. It is true that we would have less say than as bloc members, but the UK voted to leave the EU and thus voted to give up our seat at Europe’s rule-making table. And if, in order to secure market access, the suggested bespoke agreement for the future includes signing up to EU single market rules, then the rule-taker objection will apply just as much as it does for the EEA. This argument is not a reason to reject the EEA when every other option also leaves us with no seat at the table.

Many say the EEA membership would not solve the Northern Ireland border issue because there is a hard border between Norway (part of the EEA) and Sweden (part of the EU). But this is because Norway is not part of a customs union, which is why nobody is arguing for a deal like Norway’s. Labour supports being in a customs union with the rest of the EU, so that objection falls.

Finally, we say we want to guarantee workers’ rights and avoid a race to the bottom. Supporting the EEA would guarantee all the European standards – including Labour standards – in an international treaty, thus protecting them from being downgraded by a right-wing Tory government free to do as it pleases outside of the EU. Who would you rather trust with workers’ rights – an internationally agreed treaty or the right-wing nationalists of the European Research Group?

It is hard to know the real motivations behind Labour’s decision not to support the EEA amendment. It may be the old tune of socialism in one country and seeing the European economic system as a bosses club.  It may be the idea, shared with the Conservatives, that we can get a free trade agreement that gives us everything we like without any of the less desirable obligations.

Whatever the reason, the consequence is clear. By tabling its own amendment to kill the EEA amendment passed by the Lords, the Labour frontbench is passing up parliament’s best chance of legislating for the UK to stay part of the EU single market. This is a moment where it is possible to change the country’s future direction, not a search for “a form of words”. If Labour’s leadership genuinely doesn’t want to be part of the single market, they would be better coming out and saying so.

To a Tory government tying itself in knots over their own endless, internal negotiations and incompatible red lines, sadly, the tabling of Labour’s amendment will have come as a relief. The Brexiteers will have read it and thought then and there that they were off the hook – despite the debate in the Lords showing that you can never be entirely sure what will happen until the vote itself.

On its own, the EEA will not answer the many legitimate grievances that helped fuel the Brexit vote. But our capacity to deal with such grievances, and to offer hope to working class communities, would be much diminished by making other decisions that would render the country poorer than it otherwise would have been, thus preventing the prosperity needed to fund the public services and the other ambitions.

Surely it is better to use every chance we have to forge a path that makes our priorities possible rather than killing off an opportunity to preserve jobs, trade, living standards; leaving us paying for the bills for a hard Brexit instead.

Pat McFadden is a former shadow minister for Europe and sits on the Committee on Exiting the European Union.