It’s a myth that Corbyn’s vision for Labour is incompatible with the EU

It was one of the reasons so many Labour MPs decided he had to go. But he survived the post-referendum challenge to his leadership, seeing off Owen Smith with ease. Then a better-than-expected election campaign – helped hugely by Theresa May’s ineptitude and Momentum’s organisation – cemented his position as leader.

He fought the election on issues other than Brexit. I thought – clearly wrongly – that this near-silence, and the evident ambiguity in Labour’s position, would damage him. Instead, Labour Leavers felt perhaps comforted that Corbyn didn’t bang on about Brexit the whole time, and many Labour Remainers – me included – saw a Labour vote as the best way to prevent May winning a Hard Brexit mandate. We also had hope that Keir Starmer, shadow Brexit secretary and a fine legal mind, would shepherd Labour to a more sensible position than the one Corbyn and John McDonnell clearly favoured.

Labour’s commitment to staying in the single market and Customs Union, at least for a transition period, was certainly a move in that direction. Then when MPs Heidi Alexander and Alison McGovern launched a campaign to keep us in the single market, there was considerable support for it.

Yet on Brexit, Corbyn was still playing the hear no evil, see no evil, speak no evil game. Since a summer of Tory chaos, he has had two Prime Minister’s Questions. Twelve questions. Not one on Brexit. Ah, say his supporters, but Brexit didn’t figure among main election concerns – data from the deepest post-election analyses suggests otherwise – and austerity is still where it’s at; added to which Corbyn did better than expected because of the promises in the manifesto, so we need to keep going on those.

And so to Conference, where a strengthened Corbyn was able to enjoy the adulation, shut down debate on Brexit, and say what he really thought… which is that if he has anything to do with it, the campaign to stay in the single market is going nowhere. ‘We need to look very carefully at the terms of any trade relationship,’ he told the BBC in response to the Alexander-McGovern campaign, ‘because at the moment we are part of the single market, obviously. That has within it restrictions on state aid and state spending. That has pressures on it, through the EU, to privatise rail, for example, and other services. I think we have to be quite careful about the powers we need as national governments.’ In other words, if we stay in, ‘Europe’ will stop us doing the things Corbyn wants to do, and which were set out in the manifesto he says was responsible for Labour’s votes. Our media seemed to take this at face value. After all, isn’t one of his strengths meant to be that, unusually for a politician, he tells the truth, has principles, sticks to them? But, having had dealings with ‘Europe’ for many years, I wondered if what he was saying was true. And so I asked one of Brussels’ most experienced legal specialists to assess the Corbyn claim. Here is what he said:

“Could the Labour Party implement its programme in the EU or in the EU’s single market?

It is sometimes suggested that EU rules would prevent the Labour Party from implementing its programme in office. Similarly, it is said that continued membership of the single market after Brexit would be incompatible with the Labour Party’s promised policies.

We make no comment on the likelihood or impact of any future agreement with the European Union in this regard; nor do we offer any judgements about the policies themselves or their implementation.

The Labour Party’s 2017 election manifesto made the following commitments:

‘Across the world, countries are taking public utilities back into public ownership. Labour will learn from these experiences and bring key utilities back into public ownership to deliver lower prices, more accountability and a more sustainable economy. We will:

Bring private rail companies back into public ownership as their franchises expire.

Regain control of energy supply networks through the alteration of operator licence conditions, and transition to a publicly owned, decentralised energy system.

Replace our dysfunctional water system with a network of regional publicly-owned water companies.

Reverse the privatisation of Royal Mail at the earliest opportunity.’

Rail

As a cursory glance at state-owned railways all over Europe will confirm, ownership is not a problem. Most European countries have state-owned railways. The UK is the exception, not the rule. It is true that EU law requires that infrastructure (rails, stations, etc.) be separate from the train services using them, but both can be publicly-owned or controlled, as they are in many EU countries. Railway companies from other EU countries, such as those operating services between Ireland and Northern Ireland or to and from the continent through the Channel Tunnel, are also entitled to offer services within the UK if they meet certain conditions. There is no reason why the UK could not bring private rail companies back into public ownership as their franchises expire.

Energy and Water

Energy supply networks can be publicly-owned and decentralised. That is the situation in many EU countries. It is also the case for water distribution. A big row erupted in Germany and Austria a few years ago when the EU considered opening water distribution concessions to a public tendering process. In those countries, and probably elsewhere, water distribution is handled by municipal bodies.

The Commission was accused of privatising water, a resource to which people have a natural or God-given right (depending on your point of view). The EU replied that it was not asking anyone to privatise anything. A state or city can distribute water itself or set up an entity for the purpose, but if it grants a concession, the European Commission thought it should allow others to make a bid. To cut a long story short, facing massive protests and petitions, the Commission gave in and excluded water from its legislative proposal on concessions. There is no reason why a network of regional publicly-owned water companies could not be created or recreated in the UK.

Royal Mail

Renationalisation of Royal Mail by the compulsory purchase of privately held shares at market prices is a matter for the British Government. In many EU countries the state is the majority shareholder in the Royal Mail’s counterpart.

State aid rules

EU state aid rules have existed since the 1950s to prevent unfair competition. They have been in the European treaties since the very beginning, long before the UK joined. Subsidies and tax breaks have continued to be granted as part of industrial strategies, to attract investment or save failing companies. They have to be justified under EU law if they affect trade with other Member States. Governments of left and right have lived with the EU rules, complained about them and even praised them, particularly when applied to another country.

There is nothing in the Labour manifesto which breaches EU state aid law. Individual measures would have to be approved. Rescue aid for companies in difficulty would require a credible restructuring plan to secure approval. Perhaps the best way to understand the challenge facing a socialist Government in the EU is to look back to the early years of François Mitterrand’s Presidency in France. Elected in 1981 on a political programme which makes Corbyn’s Labour Party look palely social-democratic, the Government included Communist ministers and set about nationalising banks and large industrial companies. Social protection policies were strengthened.

Industrial policies were instituted to dynamise the French economy in key sectors. Some aspects of this were a continuation of statist Gaullism, others were more genuinely socialist in inspiration. Did Europe stop this happening? No, and when a choice had to be made between staying in the common market and going it alone, it was a French decision to choose the former.

The grounds for doing so included internationalism and geopolitical interests and also the conviction that nationalisation and state-driven industrial policies did not require protectionism to succeed. Mitterrand’s Finance Minister, Jacques Delors, went on as President of the European Commission to turn that common market into a single market with the support of Mitterrand, Kohl and Thatcher. France chose open borders and continued European integration over some form of socialist autarky in one country. That choice survives in France to this today, having been challenged repeatedly from left and right.

Free movement of workers

The 2017 Labour manifesto said that ‘Freedom of movement will end when we leave the European Union. Britain’s immigration system will change, but Labour will not scapegoat migrants nor blame them for economic failures. Whatever our trade arrangements, we will need new migration management systems, transparent and fair to everybody. Working with businesses, trade unions, devolved governments and others to identify specific labour and skill shortages. Working together we will institute a new system which is based on our economic needs, balancing controls and existing entitlements.’

It is true that free movement of workers is an essential part of the EU’s single market. However, that freedom is far from unconditional, as was set out clearly in the EU’s February 2016 agreement with David Cameron. It ‘may be subject to limitations on grounds of public policy, public security or public health. In addition, if overriding reasons of public interest make it necessary, free movement of workers may be restricted by measures proportionate to the legitimate aim pursued. Encouraging recruitment, reducing unemployment, protecting vulnerable workers and averting the risk of seriously undermining the sustainability of social security systems are (recognised) reasons of public interest…The right of economically non-active persons to reside in the host Member State depends under EU law on such persons having sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State, and on those persons having comprehensive sickness insurance.

‘Member States have the possibility of refusing to grant social benefits to persons who exercise their right to freedom of movement solely in order to obtain Member States’ social assistance although they do not have sufficient resources to claim a right of residence.

‘Member States may reject claims for social assistance by EU citizens from other Member States who do not enjoy a right of residence or are entitled to reside on their territory solely because of their job-search. This includes claims by EU citizens from other Member States for benefits whose predominant function is to cover the minimum subsistence costs, even if such benefits are also intended to facilitate access to the labour market of the host Member States.’

The 2016 agreement is, on its own terms, lifeless as a result of the referendum result. Nevertheless, it states what all 28 national leaders and the EU institutions considered to be the legal position not very long ago.

A Labour Government seeking ‘a new system based on our economic needs, balancing controls and existing entitlements’ could build on these statements to regulate movements into the UK. Free movement is not and has never been uncontrollable. A 2004 directive sets out limits and conditions which Member States may impose. Britain chose to welcome large numbers of workers from countries which have joined the EU in recent years, while others imposed restrictions, and EU law already provides several legitimate grounds for limiting free movement.

The history of the last few decades shows that Britain has the astute politicians, dedicated civil servants and clever lawyers to succeed in influencing the EU agenda. It may not have always been appreciated in Britain itself, but that is certainly the way it looked in many other European countries. There is no reason why a determined British Government could not be persuasive in promoting policies already, as we have seen, legally possible and politically plausible, as well as implementing them at home.

Remaining a Member State would of course make that task much easier, but another status involving membership of or very close association with the EU’s single market should not make it unattainable.

Rights at Work

The 2017 Labour Manifesto sets out a firm commitment to strengthening and protecting rights at work. EU employment law is the backbone of many essential workplace rights in the UK today: working time, equal pay, protection of temporary and part-time workers, to name but a few. The UK has played an important role in shaping these rules and UK workers have benefited from the direct effect of EU rules in UK employment tribunals. The world of work is changing and the EU is currently looking at ways to strengthen its employment rules by modernising worker protection to deal with new forms of employment and promoting gender equality by proposing paid parental and paternity leave. An amendment to the Posted Workers Directive has been proposed to deal with concerns that workers from other EU countries are used to undercut national pay rates and protections. French President Macron has been very vocal on that issue. It would make sense for a Labour Government to work together with other European countries to shape and improve common employment protection standards.

In conclusion, Corbyn’s agenda is compatible with the EU’s social market economy and single market. The rest is politics.