Labour Party Conference

LABOUR PARTY CONFERENCE Edelman

27 September 2017

Rob Newman Account Director & former Labour adviser

Pawel Swidlicki Brexit Analyst and Policy Expert

Robert.Newman@Edelman.com

Pawel.Swidlicki@Edelman.com

ONE MORE HEAVE? The election result in June was certainly unexpected but, if some Labour Party Conference delegates in Brighton this week were to be believed, the outcome was even more shocking than you remember: apparently, Labour won.

That was certainly the view of Unite General Secretary Len McCluskey, who took to the podium to rail against “cowards”, “traitors”, “whingers and whiners” who said that Labour should have done better. “We did win! We won hearts and minds!”

Hearts and minds had certainly been won over in the hall.

This was not a Conference for critics or fairweather friends. Either you were a signed-up member of Project Corbyn or you were an enemy. As George W. Bush once said, “You’re either with us or against us.” Shadow Chancellor John McDonnell swiped at the media and Labour’s opponents – “Those terms are often interchangeable, by the way”. A 17 year old delegate from Wrexham suggested that the most senior Muslim politician in the Western world and the mayor of our capital city should get a speaker slot; he was booed. The Jewish Labour Movement proposed a rule change to stamp out discrimination. A stream of delegates responded by calling for JLM’s expulsion and branding attempts to stamp out Holocaust denial as “thought crime”.

Labour members are more convinced than ever of the righteousness of their own cause, propelled forward by what increasingly looks like a cult of personality around the leader (for all the ‘Messiah’ jibes aimed at Tony Blair, there was never anything like this level of devotion – and merchandise – dedicated to him).

Each mention of his name began the now wearyingly familiar chant (it has now mutated to include other members of the Shadow Cabinet, notably Angela Rayner and Rebecca Long-Bailey). During the annual party finances report, where after ten long years it was reported that Labour is debt-, loan- and mortgage-free, a delegate asked ecstatically: “How much of this is all down to one man – Jeremy Corbyn?!” Cue wild applause.

What is business to make of all this? It can’t be denied that Conference this year was energised in a way that has been sorely lacking in recent times. Attendance was high, confidence is soaring and companies have responded by attending the exhibition and Business Forum – where, once again, Labour Party staff organised relevant and interesting roundtables on topics such as the digital economy and automation. After that Forum, delegates were ushered into the hall to hear Mr McDonnell. The Shadow Chancellor made a serious speech identifying some of the major challenges facing post-Brexit, 21st century Britain – and then outlined how he would solve them by government co-ordinating investment with Strategy Boards and taking PFI contracts in-house, while simultaneously pledging a ‘fiscal credibility rule’ that will eliminate the deficit and reduce debt.

It is hard to see how the contradictions here can be resolved, and business may wonder if it is possible to prepare Britain for 2020 with an approach lifted from 1970. Nevertheless, the Labour leadership is brimming with conviction and confidence that it can work, and any expectation that the project would be diluted by the realities of office should be treated with caution.

One example from Mr Corbyn’s speech illustrates the point. He noted how automation threatens unemployment and how lifelong learning will be crucial in future. His solution? Throw money at a giant, state-provided National Education Service, with vocational and technical college courses also provided free of charge. It may only take one more heave to put Labour into government. The danger is that it will make the economy profoundly sick.

WHERE DOES LABOUR STAND ON BREXIT?

Since the referendum, Labour has had to deal with the fact that the vast majority of its MPs and activists and the majority of its voters were pro-Remain, while the majority of its constituencies were pro-Leave. The result has been an awkward, ambiguous and at times contradictory compromise, with occasional sharp zigzags across the Remain-Leave spectrum.

The conference brought into focus many of the fault lines within the party. Thankfully for the leadership, they were able to manage the agenda to keep a full Brexit debate off the main floor, relegating it to the fringe.

Single Market/free movement. Over 30 Labour MPs, MEPs and senior trade unionists signed a letter urging Labour to commit to continued Single Market membership, including the free movement of people. However, this is a red line for MPs in heavily Leave areas, including the likes of Caroline Flint and Stephen Kinnock, who were previously strong Remain advocates. Shadow Brexit Secretary Keir Starmer said Labour are “flexible as to whether the benefits of the Single Market are best retained by negotiating a new Single Market relationship or by working up from a bespoke trade deal”, while Jeremy Corbyn pledged “unimpeded access” to the single market – an upgrade from his previous position of “tariff-free access”. On future EU immigration, he said that “there is going to be a lot of movement … people are going to come and work here and a lot of people from Britain are going to go and work there. There has to be an agreement on it and how it is achieved.”

Trade and Customs Union. The party’s official policy is that “remaining in a form of customs union with the EU is a possible end destination for Labour”. This would restrict the UK’s ability to pursue trade agreements with third countries post-Brexit; but few in Labour attach the significance to these deals that pro-Brexit Tories do. Indeed, Labour is outright sceptical of a ‘race to the bottom’ trade deal with the US. Regulatory convergence. Unlike the Conservatives, Labour sees EU regulations as an asset rather than a burden, including in areas such as product standards and environmental regulations. Leaving these broadly in place would be a crucial element of Labour’s proposed UK-EU ‘progressive partnership’; indeed, Jeremy Corbyn endorsed staying within the EU’s ‘force field’, arguing: “I don’t want us to become some kind of offshore tax haven on the shores of Europe … I want us to have an economy that develops and grows, an investment-led economy, high wage, high activity economy. You do that by an effective trading relationship with Europe. Every one of our manufacturing industries has a massive supply chain, all across Europe. You can’t cut that off and break it.”

State aid. The hard Left within Labour has long believed that EU state aid rules prevent governments from pursuing radical economic policies such as the renationalisation of public utilities (the extent to which this is really the case is disputed by experts in EU law). Either way, this could be one of the very few areas in which a Labour Government would want a looser agreement with the EU than a Conservative one.

Second referendum. Many Labour Remainers would like to retain the option of staying in the EU altogether via a second referendum. Technically, it remains the party’s policy – as agreed at last year’s Conference – that if the Government is unable to negotiate a better deal than the existing terms, the public should be given the option of staying in after all. Deputy Leader Tom Watson and London Mayor Sadiq Khan are among the more prominent supporters of this policy.

Through the fog, the broad outline of Labour’s Brexit policy is just about discernible. Aside from the party’s hard anti-EU fringe, the centre of gravity is either to retain Single Market membership or to seek a model of close alignment with it, with some tweaks to free movement and possibly state aid rules (commonly referred to as the EEA minus model).

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.

This is a narrower range of outcomes then for the Conservatives, where everything from a close association model, a basic trade deal and a hard Brexit on WTO terms are still in play. In general, Labour are more relaxed about the costs of retaining a closer relationship with the EU, including staying within its customs and regulatory orbit and retaining a relatively liberal migration regime.

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.

Needless to say, there are still a lot of details to be worked out. Nonetheless, should Labour find itself in a position to actually negotiate with the EU, it would at least begin from a more realistic position than the Government, with its proposed entirely new model with a unique balance of rights and obligations and sector-specific design.

27 September 2017

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