Busting Lexit myths?

A substantial trend of opinion on the left has always opposed the European Union as a neo-liberal institution. It was argued by Tony Benn, among others, that far from uniting the peoples of Europe on the basis of cooperation and mutual support, the EU operated on terms set by the biggest corporations using market power to maximise profits. It was on this basis that the Lexit campaign called for a ‘leave’ vote and is today campaigning to ensure that the EU’s neo-liberal requirements are not reinstated through membership of the Single Market or of the EU’s Customs Union (which includes compliance with pro-business trade treaties such as CETA). Unite, among other unions, and the Labour Party take a similar position. They do so because they see Single Market membership as preventing the type of state-led industrial policy they believe essential for economic regeneration. They call instead for tariff-free access to, but not membership of, the Single Market.

It is against this background that a number of figures associated with the centre-right of the Labour movement, the best known being Lord John Monks, have issued the manifesto Busting the Lexit Myths, arguing for Single Market membership. This manifesto seeks to demonstrate that claims about the neo-liberal character of the EU are incorrect: that the EU poses no obstacles to public ownership or to an industrial policy involving state aid and, conversely, does guarantee essential employment rights.

What are its claims? On public ownership, it points out that there are state-owned rail companies operating across Europe including some with franchises in Britain. On state aid it argues that there are ‘social clauses’ that enable governments to support firms where there are special local needs. It denies that the EU is associated with austerity in Britain and also argues that it is misleading to claim that EU trade treaties such as CETA would thwart public sector intervention in privatised services.

More revealing, however, is what the document omits. It says nothing about public procurement, the anti-union judgements of the EU Court of Justice, the EU’s hostility to collective bargaining or its legal prioritising of the ‘right of establishment’ and the free movement of capital.

Public procurement is very important. Currently it amounts to over 15% of GDP and represents the biggest single policy lever that a left government would possess. EU rules for compulsory competitive tendering mean that currently almost all contracts end up in the hands of companies like Serco or Carillion. Attempts by the Scottish government to exempt ferry services on social grounds came to nothing. It has not even been possible to secure payment of the living (as against minimum) wage, require collective bargaining or exclude blacklisting companies. 

Yet the industrial policy documents of both Labour and Unite see public procurement as critical for the regeneration of regional economies through the sourcing of materials, sectoral collective bargaining, the upgrading of skills and the redevelopment of direct labour.

Also not mentioned is the EU Court of Justice prioritisation of the rights of capital (‘the right of establishment’). Its Viking and Laval judgements continue to prevent strike action to secure equal pay for migrant workers (or as in the case of British Airways for staff recruited to a separate company registered in France). There is also the 2016 Holship judgement in the EFTA court that led to the scrapping of Norway’s dock labour scheme. Registration of dockers limited the freedom of other employers. Nor is there any mention of the EU Commission’s drive to replace collective bargaining by individual flexicurity contracts – leading, as John Hendy QC has recently highlighted, to a collapse in sectoral collective bargaining agreements. In Portugal, for instance, coverage fell from 80% to 30% coverage in five years.

What of public ownership? Yes, there are state-owned companies. But they operate in increasingly difficult circumstances in competition with the private sector. On 22 March, France will see a general strike to protect what is left of the SNCF. According to Le Monde, Macron proposes to bring French railways in line with EU law by breaking up ownership of the track, opening all sectors to competition and ending the current contracts of railway staff. As a former general secretary of the European TUC, Lord Monks should be aware of this. Comprehensive public ownership of transport – or energy – is not possible.

Lord Monks should also be aware, in terms of EU austerity, of the ETUC’s 2012 condemnation of the EU’s Programme of Economic Governance which reduced the permissible public sector deficit to 0.5% of GDP for the 26 signatory states: ‘running as a red line through the programme is the idea of turning wages into the main instrument of adjustment … devaluation of pay in the form of deflationary wage cuts. To achieve this wage ‘flexibility’, labour market institutions which prevent wages from falling are perceived as being a ‘rigidity’ which should be eliminated’. Britain still has its own EU ‘reform programme’ requiring compliance with EU austerity targets.

Open Britain was originally the big business financed Stronger in Europe campaign. Its document should come with a very strong health warning for anyone on the left. It can be read at https://d3n8a8pro7vhmx.cloudfront.net/in/pages/14074/attachments/original/1517301904/lexit_paper_finalPRINT_noembargo.pdf?1517301904

John Foster is the international secretary of the Communist Party.

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