Business leaders have thrown their weight behind Jeremy Corbyn’s announcement that a Labour government would seek to keep the UK in a customs union with the European Union.
The Confederation of British Industry (CBI), the Institute of Directors and a number of industry bodies and trade unions welcomed the confirmation that Labour would seek a “comprehensive” customs deal with the EU to prevent tariffs being imposed and avoid the risk of a hard border in Northern Ireland.
Mr Corbyn used a keynote speech on Brexit to clarify his party’s position and put clear water between Labour and the Conservatives on the issue of the customs union, saying his party would seek to maintain existing terms by negotiating a new deal with the EU.
Speaking at the National Transport Design Centre in Coventry, Mr Corbyn said: “We have long argued that a customs union is a viable option for the final deal.
“So Labour would seek to negotiate a new comprehensive UK-EU customs union to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland.”
Responding to the speech, Carolyn Fairbairn, director general of the CBI, said: “The Labour leader’s commitment to a customs union will put jobs and living standards first by remaining in a close economic relationship with the EU.
“It will help grow trade without accepting freedom of movement or payments to the EU.
“Importantly, a customs union will go part of the way to providing a real-world solution to the Irish border question that is of such urgent concern to the people and firms of Northern Ireland.”
The Institute of Directors also welcomed the announcement but demanded that the main political parties clarify the details of their policies.
Stephen Martin, the group’s director general, said: “While Labour has firmed up their position on customs today, there are still many unanswered questions from both Labour and the Conservatives about the UK’s future relationship with the EU, and this is making it hard for businesses to plan.
“As with everything about the Brexit process, extracting detailed and specific answers on future trade arrangements from our political leaders has been a slow and laborious process.”
Paul Everitt, chief executive of ADS, which represents companies in the aerospace, defence, security and space sectors, said: “A customs union with the EU is a practical solution that would put businesses in the best possible position to compete after Brexit.
“We welcome the position set out by the leader of the opposition today that Labour will support a customs union with the EU and stay in important EU agencies.”
Mr Corbyn said a customs union with the EU would only work for the UK if it is given a seat at the table when new deals are negotiated.
Any attempt by Brussels to force the UK to accept deals negotiated by full EU members would see Britain end up “as mere rule takers”, he warned.
In this case, Labour could ditch attempts to negotiate a new union and instead follow the Conservatives in ruling out any customs union with the EU after Brexit – a move that would likely see tariffs imposed on goods and lead to a hard border in Northern Ireland.
Mr Corbyn said: “We are clear that the option of a new UK customs union with the EU would need to ensure the UK has a say in future trade deals.
“A new customs arrangement would depend on Britain being able to negotiate agreement of new trade deals in our national interest.
“Labour would not countenance a deal that left Britain as a passive recipient of rules decided elsewhere by others. That would mean ending up as mere rule takers.”
Accepting that staying in a customs union would prevent the UK forging independent trade deals with other countries, Mr Corbyn said Labour did not believe “that deals with the US or China would be likely to compensate for a significant loss of trade with our trading neighbours in the EU” – a fact he said was confirmed by the Government’s own impact assessments.
Mr Corbyn’s spokesman confirmed that keeping the UK in the customs union would be the aim of a Labour government but was not a firm pledge.
He told The Independent: “We’re saying a customs union between the UK and the European Union is an option – we’re not saying that’s a commitment.
“It’s an option and we would seek to negotiate that option.”
Labour’s softening of its Brexit stance raises the prospect of the party joining with Tory rebels to defeat the Government on a key motion that has been tabled to the Trade Bill.
The cross-party amendment seeks to force the Government to keep the UK in a customs union with the EU. It is thought to have enough support from Conservative backbenchers to pass, should opposition parties support it. Labour has hinted it is minded to do so.
Mr Corbyn also said Labour wanted “a new and strong relationship with the single market” but would seek to negotiate exemptions from EU rules that the party believes could prevent it from implementing some of its key policies, such as bringing railways and water companies back into public ownership.
“The idea that competition rules work for the benefit for all – we do not believe to be the case,” he said.
Asked for specific examples, he replied: “For example the nationalisation of RBS, in order to accommodate European rules, was accompanied by the selling off of some of the best parts of RBS, and the public was left with the remainder.”
Mr Corbyn also raised the prospect that Labour could agree to a deal with the EU even if it means the continuation of freedom of movement.
While accepting that freedom of movement will end after Brexit, he said Labour’s priority was “growth, jobs and people’s living standards.”
“We make no apologies for putting those aims before bogus immigration targets,” he added.
Despite the positive reaction from business groups, some of Mr Corbyn’s own MPs said the speech did not go far enough.
Chris Leslie MP, a supporter of the pro-EU Open Britain campaign, said: “Jeremy Corbyn’s speech is not the end of Labour’s debate on Europe.
“His commitment to the customs union is welcome but it is nowhere near enough.
“Staying in the single market is absolutely essential if we are to protect manufacturing jobs and investment and to avoid a hard border in Ireland.
“Nor can we pretend that we are going to be able buy our way into this or that European institution as though they were items on a menu. The only sure and certain way to get the benefits of single market membership is to be a member of the single market and we should not pretend otherwise.”
Downing Street confirmed that the UK would not be seeking to negotiate any kind of customs union with the EU.
Theresa May’s official spokesman said: “The Government will not be joining a customs union. We want to have the freedom to sign our own trade deals and to reach out into the world.”