A closer look at Labour’s “new” EU policy

Earlier this week Labour make a concerted effort to re-launch its EU policy, an area which we recently argued had become somewhat ambiguous, aside from some populist noises concerning the free movement of workers. Shadow Foreign Minister Douglas Alexander, who barely referenced Europe in his conference speech, compensated with a dedicated speech on the issue, preceded by an op-ed in the Guardian entitled “Labour's mature patriotism over Europe”.

The Guardian’s political editor Patrick Wintour described it as a “major rethink”, over at the Spectator, Peter Hoskin blogged that: “Alexander drags Labour closer towards the Tories on Europe”, while over at Labour List John Worth - a Labour blogger - professed himself to be disappointed by the new “Tory light” policy. Yet a day later the Telegraph's Ben Brogan wrote that "Labour remains committed to big Europe", while the Guardian's Michael White agreed, adding that: to the relief of residual pro-Europeans in his own party and beyond, Alexander opted to “push against simplistic scapegoating promoted by the porn peddlers and tax-dodgers of Fleet Street (sic)… albeit unheroically”.

So why has the reaction been so confused and contradictory? This is partially because the full speech was more nuanced and contained a number of caveats and qualifications, whereas the shorter op-ed piece had hinted at a more profound shift in Labour's policy; most likely this was intentional, as it allowed Labour to seize the headlines over the issue and create the impression they were more in tune with public opinion, which has become increasingly critical of the EU.

So has Labour's EU policy shifted significantly towards a comitment to EU reform, or has nothing fundamentally changed aside from tone and emphasis? Lets look at Alexander’s speech in greater detail:

“being the Party intent simply on defending today’s European status quo would be wrong for Labour and wrong for Britain... we have a real opportunity to achieve the fundamental and necessary reforms to, for example, the Common Agricultural Policy, the Common Fisheries Policy, the way that the EU budget is spent... the unnecessary second home of the European Parliament”

Welcome as this commitment to reform is, it can hardly be described as groundbreaking; in government, Labour had consistently made the case for EU reform. The problem, in our view, was that they conceded too much and achieved too little in response, in particular on the UK’s rebate and CAP reform. For example:

Tony Blair today warned European leaders he would not discuss Britain's controversial £3bn rebate without a full debate about the EU budget, including the common agricultural policy.
Guardian, 13 June 2005

UK Prime Minister Gordon Brown has said economic reform within the European Union "must accelerate" if the 27-nation organisation is to prosper.
BBC, 21 February 2008

Caroline Flint, Minister for Europe, said: "The Common Agricultural Policy in its current form doesn't serve the best interests of the farming industry or consumers across Europe, which is why we've consistently pushed for far-reaching reform.
Telegraph, 31 March 2009

Moving on, the media have also picked up on Alexander’s line that:

“But as in the past, in the future, the economics will transcend the politics in Labour’s approach – and that means joining the single currency is not on Labour’s agenda.”

Again, it doesn’t strike us as through there has been a road to Damascus moment here; the UK-in-the-euro brigade has been haemorrhaging former supporters, and it could hardly be said that it was on anyone’s agenda at present. Ed Balls has not been shy in claiming the credit for having kept the UK outside the euro, so again, this can hardly be seen as a change of Labour policy.

This leaves us with the one interesting and genuinely new development: Alexander’s views on Treaty change, the possible repatriation of powers from Brussels, and Britain’s future in the EU in the context of greater eurozone integration, something we have highlighted as a potential risk. Here is the key passage:

“a two speed Europe... would pose fundamental risks – not only to the UK’s financial services industry but more broadly to our interests within the Single Market. A better way forward would be to engage now with the reality that Germany is seeking treaty change that enforces greater discipline within the eurozone and seize this opportunity to safeguard the rights of non-euro members. Within that challenging but realisable agenda for reform, of course the issue of the present balance of powers can be considered, but to suggest at this time that repatriation should be Britain’s overriding priority... miss reads profoundly the risks and the realities of the present situation.”

A few points to make here. Firstly, speaking only a few weeks ago, Labour leader Ed Miliband indicated that Treaty changes would be a distraction, so Alexander’s agreement that the UK ought to use upcoming Treaty negotiations to maximise the its national interest is certainly a policy shift. The idea of examining the balance of power between London and Brussels, as well as a pragmatic approach to maximising the UK's national interest is very much a nod towards the Government's current approach, albeit the Conservatives are keen to go much further than the Lib Dems. Secondly, given the risks of ending up on the wrong side of both events and public opinon, Labour has little choice but to acknowledge the need for safeguards to protect Britain and other euro 'outs' from being outmaneuvered by a potential eurozone 'bloc vote', even if Alexander did not elaborate on what these safeguards would be.

However, as we have argued (for example in our recent paper on the EU's social & employment laws), with Europe likely looking at a new long-term political settlement, it may be necessary for the UK to go above and beyond the Single Market and look at areas where certain EU powers and competencies ought to be brought back to the national level. Here Alexander is a bit vague - while acknowledging that the balance of powers could be considered, he argues against repatriation, which would mean that such a consideration would be no more than an academic exercise. He also specifically argued against bringing home social and employment law, arguing that:

In my view, it is not in Britain’s national interest for our national discourse to be dominated by concerns about the reach of Brussels as we enter an era of international economics defined by the rise of Beijing…If this Government were to scrap the social chapter, I think many people would see it as an attempt, not to limit the rights of Brussels but to limit the rights of working people in Britain.

We would argue that the two are connected; given the rise of developing countries like China, it is even more vital that not only the UK but the EU as a whole does not retreat into outdated, uncompetitive, one-size-fits-all model but introduces reforms that will enable it to compete with the emerging economies. As we argue here, this doesn't have to involve compromised workers' protection, for example.

So in conclusion: some interesting developments but as for a “major rethink”? Possibly, but we’re not yet convinced...