Leaving the EU: State Aid, Public Ownership and Workers’ Rights

Debate between Chris Elmore and Laura Smith

Tuesday 11th December 2018 Westminster Hall

[Laura Smith]

I thank the hon. Gentleman for that intervention. I will come on to that issue, and specifically the level playing field, later in my speech. I hope that I will answer his question shortly.

One would have to be wilfully blind to argue that there is no tension between EU law and the pursuit of a heightened role for the state in our economy. For now, I want to move on to discuss public ownership, which can take various forms. I am not advocating organisations that are owned by the Government but behave in the same way as for-profit companies, focusing on financial goals and insulated from democratic control, but the dogmatic obsession with privatisation in the UK in recent years has been exposed as a failed and outdated ideology. Hon. Members no doubt represent workers in their respective constituencies who were affected by the collapse of Carillion, which cost the taxpayer at least £148 million. There were also the failures of the east coast main line and Northern rail services, and the emergency takeover of Birmingham Prison—the list goes on.

Our public services have been siphoned off and are run by private companies interested only in extracting profits to line the pockets of their shareholders, instead of reinvesting them to improve the service or reduce consumer bills. The privatised water companies have paid out £18 billion in dividends to shareholders over the past 10 years.

[Chris Elmore (Ogmore) (Lab)]

My hon. Friend is making a very important point about how water companies work. In Wales, we have Dŵr Cymru—Welsh Water—which is a publicly owned company that reinvests in the water network and reduces people’s bills. There are very real examples of how water companies can work for people, and we have the best example in Wales.

[Laura Smith]

I thank my hon. Friend for that example.

In the name of efficiency, our public services have been handed to those offering the cheapest services, often at the expense of our public sector workers, who have paid the price with their pay, their terms and conditions and even their jobs. Public ownership does not just bring an end to such bad practices. Done right, it can be used to combat inequality, political disenfranchisement and underinvestment.

--- Later in debate ---

[Laura Smith]

I thank the hon. Gentleman for his intervention. I know everybody says this, but I will come to that later, when I address broadband specifically. I agree that improving that infrastructure is essential.

The recent research from the IPPR that I mentioned earlier concludes that the public place more weight on returning powers to expand the use of state aid than to deregulate, with 53% showing a preference for allowing the Government to support and protect our industries, while only 26% preferred conformity with EU state aid rules to secure a far-reaching EU trade deal.

The variation in WTO-plus agreements suggests to me that a bespoke trade deal could, in theory, include room for structural subsidies. Those could, for example, support industries of particular national value or natural monopolies, where cost reductions would be beneficial and would have no impact on other countries. In that sense, Brexit offers an opportunity to redefine what a true level playing field looks like.

The Communication Workers Union suggested that there would, in theory, be a strong argument for rolling out superfast broadband everywhere, supported by the state, which takes us back to the point made by the hon. Member for Central Suffolk and North Ipswich (Dr Poulter). Not only is that a natural monopoly, but it is a driver of social and economic wellbeing, as he pointed out. A similar argument could be made for our post office network.

With regard to the withdrawal agreement as it stands, the Attorney General has made it quite clear that in the backstop, restrictions on state aid are hardwired, and new restrictions could be introduced even if they are not in our national interest. I would be grateful if the Minister clarified whether he expects our future relationship with the EU to be substantially different or based on a parallel system. In the same way, the EU procurement directive is far more restrictive than the WTO agreement on government procurement. I would support, for example, limiting eligibility for public procurement contracts to companies that can demonstrate ethical maximum pay ratios and gender pay ratios, yet the EU procurement directive raises questions as to whether that would be compatible with single market rules.

There will undoubtedly be risks to workers’ rights if we leave the EU. Parliament is currently considering a deal that refers only to “non-regression”, when it would surely have been possible to ensure that British workers enjoy at least the same statutory rights as their European counterparts, as part of what I would describe as a genuine level playing field. We must also consider collective bargaining. I do not want to stray into a debate on the benefits of collective bargaining, but suffice it to say that I believe that rolling out sectoral-level bargaining will bring far more than just improvements to workers’ wages or employment conditions, and, alongside other reforms, it can give workers a real stake in their industries, and is another prerequisite for democratising our economy.

[Chris Elmore]

I thank my hon. Friend for giving way again, and she is making some important points. She has talked throughout about a level playing field for workers’ rights and state aid. Does she agree that it is extremely important that the UK Government work with both the Scottish and Welsh Governments where there are devolved responsibilities, to ensure that there is a level playing field? That applies particularly to future funding for communities such as mine, which received objective 1 and objective 2 status, and where Welsh Government Ministers are responsible, for example, for the NHS pay structure and, from next year, for teachers’ pay?