Labour Splits Come to the Fore: What Does This Mean for Brexit?

LABOUR SPLITS ON BREXIT COME TO THE FORE

Edelman

30 June 2017

Pawel Swidlicki Brexit Analyst

Rob Newman Account Director

Pawel.Swidlicki@Edelman.com

Robert.Newman@Edelman.com

Jeremy Corbyn emerged from the election with his leadership credentials bolstered and over the course of the past couple of weeks he has caused the government serious discomfort on a range of issues from the Grenfell disaster through to the public sector pay freeze.

However, the party’s own divisions on Brexit were exposed yesterday.

ALMOST 1 IN 5 LABOUR MPs REBEL ON KEY VOTE We are used to seeing headlines about Tory splits on Europe – indeed in our previous note we documented how that party is divided between MPs who are sticking rigidly to the government’s position and those on either side who back a softer and a harder version of Brexit respectively.

Yesterday however it was the turn of the Labour party to come publicly unstuck on Brexit with 49 MPs defying the party whip to vote in favour of an amendment the Queen’s Speech tabled by Chuka Umunna calling for the UK to remain within the single market and customs union post-Brexit. Three shadow ministers – Andy Slaughter, Catherine West and Ruth Cadbury – were sacked from the frontbench while a fourth, Daniel Zeichner, resigned.

Labour’s success in the election was to win large numbers of Remain voters while also securing the support of a substantial chunk of the Leave vote. This was achieved thanks to an ambiguous and at times contradictory Brexit stance which heavily implied leaving the single market while pledging to retain its benefits. Many more MPs sympathetic to the amendment nonetheless did not back it out of a desire to maintain party unity.

Deputy Leader Tom Watson criticised the move as “politically unhelpful at a time when the entire Labour Party is buzzing because we did far better in the general election”, i.e. focusing his ire on the timing of the amendment rather than its substance.

This position is becoming increasingly hard to maintain with the party’s shadow Brexit Secretary Keir Starmer having to navigate a tricky path between the strong pro-single market views of the majority of Labour MPs and the position of Jeremy Corbyn and John McDonnell who are much more relaxed about leaving it in order to be free to pursue a more interventionist economic agenda post-Brexit. Indeed, McDonnell in particular views Brexit as a distraction from his wider agenda – as Nicky Morgan noted during yesterday’s debate, he did not even mention Brexit until about half an hour into his opening remarks.

The new EU faultline within the party cuts across previous divides; while Umunna is often classed as a ‘Blairite’, the same cannot be said of Slaughter and West – the latter in particular has been a strong supporter of Corbyn since her election in 2015. Conversely, several former leading lights of New Labour and strong Remain backers such as Caroline Flint have now concluded Brexit must be forged ahead with, and that includes leaving the single market.

We anticipate that the party’s discomfort on Brexit will get worse rather than better in coming days, weeks and months as the negotiations proceed, giving the government an opportunity to distract from its own divisions by turning the spotlight onto Labour.

At some point the party is going to have to decide where exactly it is going to land on this issue and what trade-offs that entails.

WHAT DOES THIS MEAN FOR BREXIT? The comprehensive defeat of the motion yesterday – by 322 votes to 101 – will cheer Brexit supporters who will argue that the possibility of the UK staying in the single market and customs after leaving the EU (the softest possible form of Brexit) is now definitively off the table.

However, it does not mean a softer version of Brexit than the one set out by Theresa May in her Lancaster House speech and in the Conservative manifesto can be ruled out.

Both the nature of the future UK-EU trading relationship as well as the scope and duration of the transitional arrangement necessary to get there remain up for grabs.

Yesterday’s vote in large part comes down to parliamentary gamesmanship – Conservative MPs such as Anna Soubry and Nicky Morgan, part of the cross-party consensus on a softer Brexit, could not have voted for a Labour amendment to the Queen’s Speech at such an early point of this Parliament, for fear of fatally damaging the Government (Morgan confessed she had been “tempted” to back it).

They have kept their powder dry at this stage but a marker has been laid down and they might decide to back other amendments – potentially to any of the eight Brexit bills set out in the Queen’s speech covering areas such as customs and immigration – on a cross-party basis in the future.

There remains a cross-party parliamentary majority in favour of a softer form of Brexit broadly along the lines being sketched out by Philip Hammond – time limited single market membership and a bespoke customs arrangement post March 2019 leading to a new trade agreement by 2021/22 which retains the highest possible degree of single market access.

The key questions are whether Hammond can win this argument within Cabinet, and whether Corbyn and McDonnell can accept such a compromise, or whether they would oppose it in order to bring down the government.

With a team of consultants from across the political parties and straddling the EU Referendum divide, Edelman’s Public Affairs team is superbly placed to give you insight, analysis and advice on the Brexit negotiations and on the new Parliament.

For more information or if you think we can help you, please get in touch with our Managing Director Will Walden at Will.Walden@Edelman.com and our Head of Brexit Advice, Lucy Thomas, at Lucy.Thomas@Edelman.com.

30 June 2017

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