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Britain and Europe

After the referendum: UK-EU politics in a ‘post-truth democracy’

4th July 2016

Labour must offer hard-edged, credible policy strategies to build bridges between communities at ease with economic change and openness and those who resent it

Authors
Patrick Diamond
Author

The referendum result is a hammer blow to progressive pro-Europeanism in the UK. Many commentators now claim they predicted Brexit, but few in the British political class saw it coming: the Bank of England and financial institutions had contingency plans to deal with volatility in the markets, yet in truth the economic and political establishment (relying heavily on erroneous evidence from the polling industry and the betting markets) believed that remain would creep narrowly over the line. The elites assumed that despite leave being ahead in the final phase of the campaign (having capitalised on heightened fears about intra-EU migration in the event of Turkish membership) the country would turn away from the economic risks entailed in leaving the EU, and would revert unenthusiastically to the status quo. Few commentators foresaw what was happening in those regions outside London and the affluent south-east of England, where voters moved in huge numbers towards leave. This is evidence of the growing chasm between the political class and voters, not a propitious sign for British representative democracy.

As to the remain campaign itself, countless early postmortems have been conducted. It was always going to be difficult to win. The case for remain is an argument for the status quo; many voters are dissatisfied with the state of the British economy after a decade of falling living standards and declining real wages. Politics itself has rarely been held in greater disrepute. Anger with a distant and unaccountable bureaucracy in Brussels is fuelled by growing levels of dissatisfaction with Westminster democracy. Nor is there much love for mainstream politicians in any of the major parties. In this febrile political context where distrust is endemic, any negotiating strategy and future model of UK-EU relations has to acknowledge the democratic will of citizens expressed on June 23.

The referendum result is still not easily explained, and we need to understand better why leave prevailed. The conventional narrative is that the leave vote was a revolt by ‘left behind’ voters who wanted to punish the unruly elites that encouraged policies like untamed freedom of movement, harsh austerity measures, and the disruptive impact of globalisation. Inevitably, the story is more complex. For one, culture was equally, if not more important than economics according to Professor Eric Kaufmann of Birkbeck College, London: the referendum exposed a ‘values divide’ in Britain as much as a traditional class divide. Research for the British Election Study (BES) by Kaufmann indicates that commitment to authoritarian values is a far stronger predictor of supporting withdrawal from the EU than income or social class: regardless of whether you are rich or poor, if you are in favour of restoring the death penalty, for example, you were more likely to support leave on 23 June.

Nor is post-2008 austerity a sufficiently robust explanation for the remain rout. Some poor areas of the UK made significantly worse off by cuts in welfare and public services nonetheless voted to remain. Where economic discontent drove voters to reject the EU, the cause was liberalisation programmes enacted 40 years ago alongside the reaction against structural economic change rather than austerity in 2008, as Will Davies has suggested. English towns once dominated by heavy industry and former Welsh mining villages rejected EU membership because both the single market and national government have ostensibly done little to provide them with a viable economic future after decades of deindustrialisation. Of course, both UK governments and EU structural funds have sought to redistribute resources to ailing regions, but as Davies indicates, one of the critical lessons of the referendum campaign is that voters do not want to be dependent on a liberal state dominated by financial interests in London. These voters want to gain greater capacity to control the destiny of their communities in accordance with working-class traditions of civic pride, emancipation and self-help.

Against this backdrop, making the case to stay in the EU was always going to be tough. Nonetheless, the remain campaign hardly made its task easier. The strategists who shaped its message were well versed in fighting UK general election campaigns in which parties need to secure barely 35 per cent of the popular vote to gain a parliamentary majority, but in a referendum campaign every vote counts. A narrow and cautious appeal to the median voter centred on economic risk and a plea to stay in the EU from big business will not build a sufficiently broad coalition in a tight race. Remain needed to demonstrate that by remaining an EU member we could build an inclusive economy in which globalisation would work for the majority, spreading growth throughout the United Kingdom, where necessary by constructively tackling the excesses of financial capitalism.

Rather than making the referendum a verdict on an out-of-touch political elite and a failing EU, remain needed to frame the contest as a choice about what kind of Britain we want to be. The remain camp, dominated by David Cameron’s advisers, would never have acceded to such a strategy since rather than confronting head-on the issue of British sovereignty, they sought to avoid it, a catastrophic error that enabled the leave camp to peddle the seductive but illusory myth of ‘taking back control’. In truth, Britain is never going to be subsumed into a federal superstate without the explicit authorisation of its citizens. National sovereignty is positive rather than negative sum: by pooling sovereignty and resources at the EU level, national governments gain greater room for manoeuvre and are better able to tame the forces of global capitalism. And the fundamental freedom to make choices about the size of the British state, levels of taxation and regulation, the sustainability of the market economy, have been preserved alongside EU membership. All of these arguments tragically fell by the wayside during the campaign.

This still begs the central post-Brexit question: what is to be done? As Andrew Gamble reflects, the set of choices confronting the political class on UK-EU relations hardly looks palatable. The ‘Norway-plus’ option is the most attractive to the political and financial elite (and indeed to many voters), but unfettered single market access requires acceptance of free movement, budgetary contributions, and EU regulations without an ability to influence the rules of the political game at European level. On the other hand, any shift towards a unilaterialist trade position will inflict an enormous shock on the British economy, dividing the Conservative party from its core support in corporate business and the City of London. Politicians will have to make these decisions within an increasingly dysfunctional and crisis-prone political system where the territorial politics of Scottish independence, turmoil in Northern Ireland, and fragmentation in England (witness the attempt by London to secure greater autonomy over taxes and spending) threaten to break the UK apart. As Gamble attests, since the crown in parliament remains the fundamental source of political authority, MPs currently in the House of Commons will have to implement a referendum decision two-thirds of them fundamentally disagree with.

For parties of the centre left, the choices are scarcely more appealing. The danger for British Labour is that it tries to fudge its position given the dilemma the party faces between maintaining the support of predominantly liberal remain voters in metropolitan enclaves, as against appealing to leave supporters in the ‘heartland’ areas of former industrial England and Wales, alongside more affluent towns in the south and midlands. Indeed, if Labour were to win the next general election, it would probably have to gain a substantial number of seats that leaned heavily towards leave in the referendum campaign. The EU referendum has entrenched a new dividing line in British politics between an ‘open’ and a ‘closed’ society that threatens to destroy the established party system. What will save Labour now, however, is not merely adept political positioning but hard-edged, credible policy strategies that lead to action, building bridges between communities at ease with economic change and openness, and those who resent it:

  • First, to develop a new industrial policy that provides a viable growth model for the whole of the UK rather than hoarding wealth in southern England. All options should be on the table including acquiring public stakes in growth companies, strategic investment in growing sectors, regional assistance and investment programmes, and social ownership of public infrastructure including the railways where economic circumstances allow. Equally essential is following through on political devolution, equipping towns outside urban areas with the tools to rebuild their economic base, not least by developing local and regional production chains.
  • Second, to fashion a new compact to deal with globalisation rebuilding a comprehensive social insurance architecture centred on the principle of contribution for those in work, and security for those who cannot work. The principle of insurance will have to be fundamentally re-thought given the changing nature of work.
  • Third, to provide more support through public funding to areas disproportionately affected by rapid migration flows. The Labour government’s Migration Impact Fund was mistakenly cut in the wake of austerity; it needs to be quickly re-established.
  • Fourth, to better control migration across Europe by working to create greater stability on the periphery of the EU through a new Marshall Plan for North Africa, concerted action to defend democratic values in Ukraine and the Balkan neighbourhood, alongside robust controls on the EU external border.
  • Fifth, to devise integration policies that work, focused on language learning for all migrant and refugee entrants to the UK alongside employment and education programmes.

 

This policy framework, of course, requires comprehensive public funding; it is true that part of the task is to invest existing public sector budgets more effectively. But all of these policies will require sustained investment, and the UK’s fiscal position is likely to become more precarious in the aftermath of Brexit: the OECD is currently forecasting that UK GDP will be 3.3 per cent smaller by 2020. One of the lessons of the 2008 financial crisis is that business and the private sector has to do more to support the public policy infrastructure needed to sustain economic openness. The Brexit outcome on 23 June makes that task even more urgent.

In the past, there has been too much free-riding by corporate business in Britain, yet the referendum result clearly demonstrates the catastrophic consequences of divergence between business and society. The two must be brought back together; the private sector has to contribute more towards the cost of essential public goods. If the UK economy does go into recession having suffered successive structural shocks in the wake of Brexit, Britain will require an immediate stimulus programme: the key will be to support growth and employment not through short-term ‘pump-priming’ or debt-fuelled consumption, but investing in the pillars of politically and economically sustainable growth that ensure as far as possible, the UK remains open to the rest of the world.

Photo credit: David Holt CC 2.0

 

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