Economics and politics - comment and analysis

Theresa May is losing it. Labour needs to make a U-turn on the Brexit

The Brexit is for the poor, the EU is for the rich

The Tories just dropped another bombshell, although, it is not that surprising: a potential bank bailout for the financial services industry, paid for by the taxpayer. The issue at stake is that leaving the EU would mean the loss of so-called passport rights for the City which grant it privileged access to trade on the single market. The Financial Times has reported that the May government is discussing paying billions of Pounds in annual fees to the EU in order to retain those passport rights. This is, in effect, a publicly-funded post-Brexit City bailout (see here, here and here).


Picture 1: Theresa May campaigning for Remain (Source: Google Images). 

As Kerry-Anne Mendoza reminds us in the Canary, the UK is just eight years down the line from the biggest taxpayer-funded bank bailout in history (see here). Let me quote some of Mendoza’s figures. According to the National Audit Office, the UK National Debt rose by £850bn as a result. This is almost twice the nation’s total annual budget. For this amount, the UK could have funded the entire NHS (£106.7bn a year) for 8 years, the whole educational system for 20 years (£42bn a year), paid the entire Jobseeker’s Allowance bill (£4.9bn a year) for 200 years. The public were repaid with austerity programmes which cut just under a million jobs from the public sector and saw the loss of mental health services, flood defences, libraries, swimming pools, care for the elderly, social housing, and critical welfare support for people living with terminal illnesses, chronic illnesses, and disability (see here). There was no bailout for small businesses, parents, students, or elderly citizens (see here).

The rest is silence: today tolerant Britain is a thing of the past, a million people are on zero-hours contracts, an abomination if there ever was one, more than a million people are dependent on charity in order to eat. What does May want? A financial bailout if necessary, which will be whenever her insane policies make it unavoidable.

Labour has to make a U-turn

Labour Shadow Chancellor John McDonnell has ruled out offering this protection to the financial services industry. He argued that the UK should be battling for all its industries and that paying huge fees for access to EU privileges undermines the whole Brexit enterprise:

“British taxpayers should not be expected to foot the bill for special privileges in accessing European markets solely for the financial service sector alone. Britain has voted to leave the EU, it has not voted for paying huge fees for special favours for bankers. We support access to EU markets for financial services, but it is crucial for the British economy that the government insist on full, tariff-free access to the Single Market for all our industries, to protect jobs and livelihoods in the UK” (see here).

It is time for Labour to come to its senses. The social basis of the Brexit is no longer eroding, it well nigh evaporating. There is no logical reason for Labour to support it. If Corbyn continues to stand behind it on the basis that ‘the people have spoken,’ it is time to make an evaluation of the general atmosphere in which they have said the word: Corbyn needs to take a look at all the lies, the propaganda, the misinformation, the deceit, the scapegoating which went on for many months before the vote was cast and then tell with a straight face that this was a honest referendum. If it is about idea that the Brexit is necessary because, with the UK in the EU, Corbyn will not be capable of implementing his re-nationalisation policies, it is time for someone to inform him that he is mistaken.


Figure 1: Results of a Ipsos MORI survey showing support for Brexit according to area and educational attainment (Source: Ipsos MORI). 

Corbyn has taken the correct position on immigration, for which he has to be congratulated. The problem is that his broader position is utterly incoherent: no restrictions to immigration, full access to the single market and a Brexit. If Corbyn wants to become PM, he has to oppose the Brexit madness, fight the political fight and win over a part of Leave electorate of the post-industrial hinterlands.

Labour will lose if it does not make a U-turn

Winning back part of this electorate will be difficult, but there is no choice. Mathematically, Labour cannot win without it and the alternative will lead to guaranteed disaster. If Labour chooses to back immigration controls, it will lose the support of the urban strata it needs to win the election. If Labour chooses the single market – this is, no Brexit – all those who thought they were voting ‘out’ to stop immigration will feel betrayed. There is, in fact, only one strategy: an unrestrained political assault on the likes of Farage and Johnson and all the other demagogues. They should be made to pay a price for their deceits.

Imagine what will happen if Labour does not act this way. The right wing Blairite alternative ‘strategy’ will never work. Their position is that Labour can indeed canvass support for remain among the students and the multicultural urban younger generations, but that the old hinterland is lost: voters will not even listen to Labour as long as restrictions on immigration are not on the top of the agenda and will either vote UKIP or not vote. Therefore, right wing Labour says, if the EU will not allow us to control immigration if we remain in the single market, then we will have to leave the single market. It sounds even vaguely democratic until you think about it and consider the consequences.

Once the whole Brexit adventure begins to bite irrevocably, Labour cannot go to back to these voters and explain how Vote Leave lied to them and took them for fools when they said that Britain would either be no worse off or better off if the UK left the EU. It will be too late. What if it turns out that the Leave voters are more dependent on the single market than they think? Labour will not be able to tell them that it is Farage and Johnson who lied to them and lost them their jobs if it too supports a hard Brexit. In the next election, the Leave areas will turn more purple (UKIP), there will be more resentment, more aggression. This will, then, in part, be a Blairite accomplishment. The Blairites will, of course, have won too. If it takes another election to get rid of Corbyn, so be it. This is not conjecture. It has been said in public.

This analysis remains fundamentally incomplete if it is not being mentioned that it was the whole right wing political class – Tories and New Labour – which for a full decade, if not longer, have played the game of blaming immigrants for everything which went wrong in the country. Today, Rachel Reeves and the other Blairites can cry hot tears as much as they want about the loss of support for Labour in their constituencies, it is not due to the immigrants, it is due to their own actions and neoliberal convictions and policies. When crucial votes in parliament came up about the welfare bill, social housing, unemployment, zero-hours contracts, mental health, disability or pensions, Reeves and circa another 180 Labour MPs were either nowhere to be found or they voted with the Tories for these bills. The very obvious little secret about all the cabal about immigration is that it is a crisis that has been for the full 100% produced by the political class and their austerity policies (as new research from Warwick University confirms (see here)).

The net result so far is looming economic disaster for the poorest, the poor and the middle class, an accelerating retreat from Britain’s liberal, inclusive and open-minded tradition, a return to the narrow, delusional world of Little England. The undertone of racism and intolerance is to be found everywhere, today to degrees which were unimaginable yesterday (such as the proposal to send refugees to the dentist to estimate their correct age) (see here).


Picture 2: Britain today (Source: Google Images). 

The truth of the matter is that there is less and less to distinguish the hard Brexiters from Le Pen’s Front National (which enthusiastically supports the Brexit) (see here). In fact, I would not be surprised if it would turn out that the Front National is less extreme than May’s extreme cabinet. There is the similarly xenophobic and nationalist Alternative for Germany and other parties in Poland and in Hungary and in basically all other countries, to various degrees of extremism. These people are nothing but wreckers and doom bringers. It goes further than this. In the weeks which preceded the referendum, I read hundreds of articles, all filled with inordinate amounts of anger, arrogance, resentment, frustration, aggression, vindictiveness – this was the time to show the EU what we can do to them! This was payback for what the vultures did to Greece! This was the way to kill off neoliberalism in Europe! Was there a plan? That EU economic governance is one big disaster, we all agree upon. To repeat my question: what was the plan? The Brexit as the ‘victory of the working class’ brought the most extreme right wing government into power for perhaps the last hundred years in the UK. The exiters on the Left should be careful. They too can get an extreme right wing government in power in their country, once they ‘get it back.’

And so we come back to Labour, to Left, democratic, Labour. Personally, I am convinced of Corbyn’s good and honest intentions. His policies could make a very positive difference. It seems, however, that Labour seems to have lost its way as it struggles with internal divisions and the mortal threat to its working-class heartlands posed by UKIP. Corbyn has now been a leader of Labour for more than a year. He had the rare courage to take principled positions on many issues. On Europe, however, he has consistently failed to stand up and show a lead or demonstrate an appreciation of the wider issues (see here). Certainly, more social housing is important. A higher minimum wage would be great. It is absolutely necessary. A ‘migrant fund’ is an excellent idea. The re-nationalisation of the railways is sound economic policy. Preserving the NHS is a matter of democracy and human decency. Why does Labour not make an anti-Brexit front with the Liberal Democrats and the Greens? Does Corbyn not understand that it will all lead to absolutely nothing without a growing economy and not only that, a growing economy that creates widespread prosperity?

If a hard Brexit takes hold – and to repeat, the Brexit is losing social support now every day – and Corbyn keeps defending it, we can forget about public spending, new programmes, reconversion, social welfare, re-nationalisation and all the rest. The extremists will be in power for a long time. They will doubtlessly continue to damage their delusional Little England. Immigrants will be scapegoated even more – nothing new under the sun. What will Labour have to say about it? Sorry, but we were behind it too?

There is no choice left. Left Labour needs to make a U-turn on the Brexit. It has to fight not only racism, but its causes. It has to understand that if it wins the election, it can implement the policies it favours. In doing so, Labour can create a momentum in the UK and in Europe as a whole, a turn to the Left everywhere, so that leftists politicians can be sent to Brussels and Strasbourg. Then they have to win the next battle: the reform of the institutions, the overhaul of EU economic governance, the end of austerity and neoliberalism, the implementation of a gigantic program of public investment in Europe. Perhaps I am a dreamer. But so far, this makes much more sense to me than anything else I have heard.