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

David Drew Excerpts

Tuesday 11th December 2018 Westminster Hall

[Dr David Drew (Stroud) (Lab/Co-op)]

I am delighted to serve under your chairmanship, Mr Hollobone, particularly as I was not on the speakers list. I thank my hon. Friend the Member for Crewe and Nantwich (Laura Smith) for making such a strong case. I welcome my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) on the Front Bench and I welcome the new Minister. I hope he enjoys his portfolio for as long as it lasts.

I want to make three brief points that it is important to make, as they sometimes do not feature in debates. Although we are here in this important debate to escape from Brexit, it very much relates to Brexit or what might result from it. First, when I have been involved in trying to save companies and looking at how the public sector can get involved in that, I have always been told that we cannot do so because of state aid rules. I have never understood what those state aid rules are. I am sure that there are state aid rules that apply, and that the European Court of Justice or the European Court of Arbitration—whichever it is—can eventually adjudicate on whether public money was used properly, but that is at best years down the line.

My point is that the argument about state aid rules has always been used to effectively allow national Governments—in this case ours—a cop-out, when what they are really saying is, “We don’t want to help this company or industry, and we now have a wonderful excuse that gives some credibility to our rationale for so doing.” It was applied to steel in Redcar, and I can cite local cases where it was up to the national Government to put their money where their mouth was and where, if they had really wanted to save a company or industry, they could have.

I know a little about the agriculture industry and the different boxes—the amber, the red, the green and the blue. This relates not only to the EU, but to the WTO, and I was pleased to hear what my hon. Friend the Member for Crewe and Nantwich said about that. We know that the WTO rules are laxer, but this is about the framework within which the EU wants to operate. The most subsidised agriculture system in the world is in America. Where did the term “pork-barrel politics” come from? It is about putting money into the American mid-west to win elections. It is against any notion of free and fair trade, so I take it with a pinch of salt when I am told that state aid rules are so restrictive that we cannot do anything.

In many ways I see that in contract law. Perhaps the days are long gone, but when we put forward a contract, the Official Journal of the European Union was always waved in our face and we were told the contract had to go through a system of rigorous assessment, yet when it came down to it, we could employ local labour when we wanted to, but that was always seen as not being possible.

My second point is about fairness in the application of state aid. I am grateful for the Library’s papers on this. When we look at state aid as a percentage of GDP, we are always in the bottom quartile. We choose not to invest anything like the sums of money that other countries do in supporting our industry. That must be the case because so many of our railways, water companies, waste companies and energy companies are owned by foreign national concerns—even nationalised concerns. So something happens elsewhere within the EU that, again, we choose not to follow as a national state. I worry that we use the EU as an Aunt Sally. Other countries seem able to control our major companies through their public sectors. Nothing illustrates that more than Hinkley Point, which we have effectively handed over not only to the French state, but to the Chinese state, which is funding it. Of course, China is not part of the EU, but it is part of the WTO, and I would love to know why, when we try to do things in this country involving the public sector, we are so much more constrained.

Thirdly, I share my hon. Friend’s concern, and I worry about where we will go after the end of March if we are out of the EU or whatever state we will be in. There is an inclination that we could witness a race to the bottom. I worry, for example, that our regulatory framework will be overseen by the Competition and Markets Authority, which, from my experience, has no real interest in labour standards or trying to protect trade union rights, which my hon. Friend the Member for Barnsley East (Stephanie Peacock) talked about. We ignore that at our peril and might find not only that we have leapt from the frying pan into the fire, but that the fire has completely engulfed us. There will be the threat of a race to the bottom. The idea that we will become a global nation basically means that we will simply cut our wages and conditions, which will apparently yield a wonderful competitive advantage.

I have made those three points because the debate is important. It is apposite because it comes on the back of all the other shenanigans that have been going on over the past few days about whether we are leaving and on what terms. This is important. The British public might be asked for a second opinion on our relationship with the EU. It would at least help if we could put to them what really goes on, rather than some of the myths that seem to be continually put across about what we can do and what we choose not to do.