A few reactions to comments by @AaronBastani and others on my piece in the Guardian on Labour and State aid theguardian.com/commentisfree/…
1. I am not denying that the State aid rules are a constraint on national policy-making. Indeed, my second point acknowledges that (the example of US States bidding against each other for Amazon’s favours - which couldn’t happen in the EU).
2. There are then two questions for the Labour Party. (a) do the constraints matter? (I take it no one likes the Amazon example, and everyone agrees that it’s good for national governments to agree not the get involved in that sort of bidding war.)
(b) Post-Brexit, can we actually escape those rules (a point that is critical if, like Corbyn, you are using the State aid rules as a justification for leaving the single market)?
3. On (a), the key point is that nothing in Labour’s 2017 manifesto would have been undeliverable because of the State aid rules. @AndDT and Andrea Biondi have written a long paper on this, which no-one has refuted.
It’s certainly possible to think of policies that would infringe the State aid rules - giving tax breaks to Amazon, for example - but the question for Labour is whether it’s interested in that sort of policy.
Examples routinely trotted out are rail and water nationalisation. But the problems there are (i) EU law on rail liberalisation (not the State aid rules - and even there the rules don’t stop Labour’s current proposals to take over franchises as they run out) and
(ii) Art 1 Protocol 1 of the European Convention on Human Rights, requiring proper compensation - and I don’t detect any movement in Labour to leave the ECHR.
4. On (b), where we are assuming someone has identified a State aid that a Labour Government would want to give that it couldn’t do under current State aid rules, you have to think about WTO rules.
It’s quite true that WTO rules - though much the same as EU State aid rules as far as goods are concerned - are less easily enforced.
But if you are a small economy (UK) next to a large one (EU) determined to enforce the rules, they are enforceable enough.
The EU could and would impose protective tariffs as soon as it detected any subsidy. That would be a serious problem for any policy of granting subsidies after Brexit.
5. In any event, perhaps the key point in my article (which neither @AaronBastani nor anyone else has challenged) is that Labour’s own customs union policy necessarily means accepting the EU State aid rules in full. To put it bluntly, Labour has already sold that pass.
So the Lexit debate about whether the State aid rules are a problem is really displacement activity: Labour has already adopted a policy that requires accepting them.
Once you’ve accepted that you will be bound by the State aid rules outside the single market - as Labour in practice has - it can’t be a relevant objection to staying in the single market (EEA or EU) that you’d also have to accept those same rules.
If @AaronBastani or anyone else has a reasoned answer to those points, I’d be interested to see it.
