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

Debate between Laura Smith and John Howell

Tuesday 11th December 2018 Westminster Hall

[Laura Smith (Crewe and Nantwich) (Lab)]

I beg to move,

That this House has considered state aid, public ownership and workers rights after the UK leaves the EU.

It is a pleasure to serve under your chairmanship, Mr Hollobone, and to have been selected to sponsor this important debate. I welcome my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) and the Minister. Their presence underlines the importance of this issue.

I do not need to spell out that we are having this debate in the context of what appears to be gridlock in Parliament. There is no clear consensus about what priorities should shape our future relationship with the EU. Today was supposed to be a day on which we made at least one decision, but even that is no longer the case. I wanted this debate to take place outside the main Chamber to ensure that its content was not considered purely in the context of the withdrawal agreement and the political declaration. Instead, I wanted it to inform the wider, ongoing debate about what the future relationship might look like.

I have chosen to consider these three policy areas for three reasons: first, because they are tools with which the UK Government could transform our economy and society for the better; secondly, because I believe that there is public support for their use by the UK Government; and, thirdly, because I am concerned that there is some friction between the effective use of these tools and EU law. This year, research by the Institute for Public Policy Research concluded that the public want to take back control and expand the role of the state, not reduce it. It suggested that there is no mandate for a buccaneering Brexit based on a race to the bottom in pursuit of even freer markets. Instead, the public want higher environmental standards, tougher regulation and a greater use of state aid, even at the cost of freer trade.

For balance, I want to make it clear that I am not suggesting that EU law bans all forms of public ownership. Nor am I suggesting that the EU prevents all forms of state aid. Indeed, there are several exemptions, and where there are no exemptions a member state can seek the approval of the European Commission. I will come on to workers’ rights later in my speech, but I acknowledge that the EU has sought to create a floor for minimum employment standards. In theory, it should prevent a race to the bottom. Those are, without doubt, important safeguards.

I was more than troubled to read that the withdrawal agreement referred only to the non-regression of labour standards. I am deeply worried that exiting on that basis would leave the British workforce exposed to the risk of seeing their statutory rights gradually eroded or falling behind those of their European counterparts.

[John Howell (Henley) (Con)]

I thank the hon. Lady for giving way. She is right to have secured this debate in this Chamber. Before she moves on to employment rights, I want to take her back to state aid. How does she think it will be different, given that the UK helped to develop the EU’s state aid rules, and the withdrawal agreement says that there will be a level playing field, which suggests that the sort of things we see now will be incorporated?

[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.