Labour must take bold strides to deepen UK’s ties with EU

Good afternoon, in the week that we started to get some early intimation of how Labour is going to have to be brave if it wants to re-engage substantively with Europe if — as current polls suggest is likely — it wins the next election.

The reaction from the Conservative-supporting media to Sir Keir Starmer’s trip to The Hague today — during which he promised to strike a “returns agreement” with the EU in order to address the small boats illegal immigration — was only a tiny foretaste of what he can expect when in Downing Street.

“Labour is ready to open the door to the EU’s asylum seekers,” was the Daily Mail’s front page take; while the Telegraph went with the slightly darker: “Starmer plots deal to take EU migrants”.

As always the language carries the sinister undertones of plotting, surrender and consorting with the “enemy” in Brussels. No doubt there will be more to come when Starmer visits the French President Emmanuel Macron in Paris next week.

None of this is a surprise to anyone who has been involved in UK politics these past 40 years, but it shows how resilient and deep-seated the anti-EU narrative remains, despite the polls showing lots of people aren’t best pleased with what Brexit has delivered.

Migration is a hot issue, of course, but this antipathy can also be expected to extend to other steps taken by Labour to align the UK with European rules and regulations as it tries to reduce the trade frictions caused by leaving the EU single market.

Labour has already said it wants to do a veterinary agreement with Brussels, though it has not been that clear on how deep alignment would be. 

Starmer talks in vague terms about making “real progress” in relations with Brussels while remaining outside the single market and a customs union, but much will depend on how meaty that engagement turns out to be. 

One place to start would be legally aligning the UK’s carbon pricing systems (very good primer here from Sam Lowe at Flint Global via UK in a Changing Europe) which would reduce trade frictions caused by related EU carbon border taxes but in effect hands control of key levers of net zero policy to Brussels.

There are good economic reasons to do this — Alan Winters’ blog here at the Centre for Inclusive Trade Policy is worth your time — but Labour can expect to cop a lot of political heat from the right while also finding Brussels driving a pretty hard bargain on the terms of any linkage if the UK seeks to cherry-pick.

One of the consequences of Labour’s decision to stay so quiet about the negative impacts of leaving the EU single market these past three years is just how little those negative narratives on EU membership (the UK being “shackled to a corpse” etc) have shifted in the public imagination, despite the costs inflicted by the deal on traders and travellers.

Without much of a run-up, Starmer will have to decide whether he wants to make a bigger public argument for being closer to Europe in the light of the strains imposed by leaving. He could try to do it “quietly” but (see above) I suspect that will risk fuelling a Brexit betrayal narrative that his opponents are desperate to foment.

Doing a returns agreement for migrants; legally linking EU and UK carbon markets; rejoining the Erasmus students exchange programme; partly pooling defence contributions for Ukraine — these would be just some of the concrete ways for Starmer to advertise that he is ending the zero-sum approach of the Johnson-Frost years. 

Starmer might start laying the groundwork in Paris next week — but as seasoned diplomats know, there is always a gap between what leaders say to each other in their chummy tête-à-têtes and what is actually deliverable in Brussels. Ask David Cameron.

Ultimately, as my colleague Martin Sandbu argues in his column this week, the EU’s current levels of disengagement is based in part around the perfectly sensible position that it’s pointless expending energy on the UK unless and until there’s a “fundamental change in UK politics”. 

And with so much distrust built up during the psychodrama of the past five years, and so many other issues weighing on Brussels, actions will have to speak louder than words.

That is where Starmer has a big choice to make. Macron has seen five British prime ministers come and go, so it will take something material to turn heads in Paris or Berlin and, indeed, in the European Commission.

Indeed, as my colleague in Brussels Andy Bounds points out, Labour’s outreach to EU capitals has been far greater than its presence in Brussels, where he sees few signs, as yet, that the party is building the relationships at official level in the Commission, Council and Parliament to get business done. 

In the bald assessment of Paul Adamson, the chair of Forum Europe and a political consultant with more than 40 years’ experience in Brussels: “They have not worked out a strategy. They are still learning about how Brussels works. They don’t have the relationships. You have to get to know people over time.”

So, as a senior former UK diplomat put it to me this week, if the Starmer “offer” boils down to “a more affable version of cakeism” he really shouldn’t expect to get anywhere. And given the abiding neuralgia of Conservative media to Europe, a halfhearted effort may see the party cop the same level of political pain for very incremental gains.

In that scenario, as one current senior UK diplomat put it to me this week, the story of Labour’s first term will be its “steady disillusionment with Europe”, resulting in a post-Brexit Labour policy to “Sunak 2.0”, nibbling at the edges, with much of the low-hanging fruit (Horizon, Northern Ireland) already plucked.

I don’t think it necessarily has to be that way, but no one should underestimate the effort that will be required to shift the dial.

Brexit by numbers

This week’s chart comes via the British Chambers of Commerce membership survey in which it asked small and medium-sized businesses how aware they were of forthcoming changes to the post-Brexit business environment.

The findings, which I reported on this week, speak to what industry is calling “Brexit 2.0” caused by the next generation of EU single market regulations — for example carbon border taxes and changes to rules on VAT — that are coming down the pipe from Brussels.

This lands on UK businesses as a function of the so-called “passive divergence” that happens when the EU continues to regulate while the UK stands still, or even goes in a different direction. 

It is a fact of post-Brexit life, so naturally begs the question of how the UK regulators and Whitehall departments should horizon-scan on incoming regulations that —  during membership — were automatically and predictably absorbed into UK law.

The survey also points to another enduring tenet of dealing with business — it takes a long time for business to hear about and absorb new rules. 

A former BCC chief used to say that it takes a year for businesses to hear about the new rules; a year to prepare to adjust their systems; another year to implement and then another year to fully get the hang of it. Four years in all. 

The fact that over 40 per cent of SMEs surveyed said they were unaware of the UK’s “UKCA” conformity assessment mark — which has been largely shelved already — is eloquent testimony to how hard it is for these things to penetrate.

Hard-pressed, multitasking managing directors in small businesses are often juggling multiple roles, too busy slaying the day-to-day dragons of rising energy costs, staff recruitment and retention to worry about the regulatory mantraps that lay down the tracks.

Brexit means the government and trade groups need to get better at spreading the word.

Britain after Brexit is edited today by Georgina Quach. Premium subscribers can sign up here to have it delivered straight to their inbox every Thursday afternoon. Or you can take out a Premium subscription here. Read earlier editions of the newsletter here.