In ordering peers to vote against retaining Britain’s membership of the single market, the leadership has placed Labour on the wrong side of history, writes Spencer Livermore
The Labour party should always stand up for Britain’s national economic interest. That is why I was so shocked and dismayed – along with many other Labour peers – when our party leadership ordered us to vote against retaining Britain’s membership of the European single market, during last night’s article 50 debate.
I thought very hard about how I should vote. I believe that the single market is fundamental to the jobs and living standards of the people our party was founded to represent. So I decided I would be betraying Labour’s values if I backed this Conservative government’s hard Brexit, and I voted in favour of the single market.
Independent evidence has shown time and again that membership of the single market is the trading arrangement that benefits the United Kingdom’s economy the most. The Institute for Fiscal Studies have shown that our membership could be worth as much as four per cent on our GDP, and that leaving could cost the public finances some £8bn. The Centre for European Reform has shown that our trade in goods with EU countries is 55 per cent higher because of our membership, and the government’s own figures show that this increased trade has raised income per head in this country by 6 per cent. Our membership is also vital for the jobs that depend on inward investment, for the cross-border supply chains those companies rely on, and particularly for the UK’s financial services sector.
The government has never sought to deny these economic benefits. Indeed, they would seem to concede the economic case by aiming to retain what they call ‘full access’. In the prime minister’s Lancaster House speech, she said that the government wanted to give ‘British companies the freedom to trade with and operate within European markets’, before setting out a wishlist of retaining as many of the ‘current single market arrangements’ as possible.
This view that the UK can retain all that is good about the single market without being a member of it maintains a trend set during the referendum campaign, when the Leave campaign promised that there would be no increased barriers to trade, and that trade with the European Union would continue – in their words – ‘exactly the same as today’.
This continues to be the government’s position, and it continues to be unconvincing. You do not have to speak to many businesses to know that ending our single market membership is the outcome they fear the most. And you do not have to speak to many people in other European countries to realise that Britain continuing to benefit from the single market, without being a member of it, continues to be a fantasy.
In the words of the prime minister of Malta, currently holding the presidency of the council, ‘thinking you can have your cake and eat it shows a detachment from reality’. He went on to state that ‘all future deals will of course be inferior’ to what we have now.
The danger for the UK is that the wishlist the government has set out will quickly be exposed as just that, and we will face the very real prospect of ending up on World Trade Organisation terms by default.
Although the government have made no economic case against the single market, they have made a political case against it. They believe that the importance of reducing immigration must override the national economic interest, and that ending freedom of movement must be the priority.
But reducing immigration is not just economically undesirable – in terms of growth, productivity and the public finances – it is increasingly obvious that it is undeliverable.
David Davis said last week – despite having claimed before the referendum that immigration could fall to ‘almost zero’ – that he now believes immigration is likely to continue as it is now for ‘years and years’, and that we ‘shouldn’t expect the door to suddenly shut’. This weekend, the home secretary confirmed that ‘immigration will not fall dramatically’. And the think tank Global Future has calculated that the reduction in immigration as a consequence of ending free movement could be as little as 50,000 – or even nothing at all.
There were many possible interpretations of the referendum outcome. The government has chosen to prioritise reducing immigration over the economic wellbeing of the nation, and as a result is pursuing the hardest possible Brexit. Yet ending freedom of movement is unlikely to even come close to achieving the government’s promises of dramatically reducing immigration.
Britain therefore risks making an enormous economic sacrifice, in terms of growth, jobs and living standards, but achieving nothing in return.
It is hugely irresponsible to give up our membership of the single market, when it is undeniably in our national economic interest, before the government have even begun negotiations.
In backing this position, the Labour party now faces being not just on the wrong side of this crucial issue, but on the wrong side of history too.
Spencer Livermore is a Labour peer and a former adviser to Gordon Brown. He tweets at @SpenceLivermore
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