It is the big issue both Labour and the Conservatives do not want to talk about, certainly not in any meaningful or realistic or constructive way, but it has nevertheless featured prominently in the last week as General Election campaigning has continued.
The issue is, of course, Brexit, and, while its conclusions were somewhat disheartening, it was good to see the UK in a Changing Europe think-tank publish a thorough report on relations between the UK and EU, which included an analysis of what might happen if Labour wins power.
UKICE’s conclusion, in its UK-EU relations 2024 report published last Tuesday, will not surprise anyone who knows what Brexit is and what it has done and will do and who is familiar with Labour’s red lines.
Labour has been at pains of late to emphasise these red lines, whenever its top brass is questioned about whether there is any possibility of rejoining the European single market.
READ MORE: Kate Forbes says economic growth crucial, sees Brexit 'conspiracy of silence'
The question of whether a future government would rejoin the single market is an entirely natural one, even if both Labour and the Tories have entrenched positions on this.
Such a move would, after all, give the UK a swift and major boost, and largely obviate the major damage yet to come from Brexit.
Labour deputy leader Angela Rayner declared earlier this month that Labour would never take the UK back into the single market.
Few would have predicted such a categoric stance when now Labour leader Sir Keir Starmer was arguing vociferously against Brexit in 2019.
SNP Westminster leader Stephen Flynn described the stance of Ms Rayner and Labour as “shameful”, noting the biggest problem facing the UK economy was Brexit. It would certainly be difficult, on any rational basis, to argue Mr Flynn is mistaken.
Scottish Deputy First Minister Kate Forbes, in an exclusive interview with The Herald last week, said: “Labour’s conspiracy of silence on Brexit is essentially conceding the damage that has been done to the Scottish economy.,,The Institute for Fiscal Studies has concluded that our suggestion that re-entering the European Union might contribute ..£30 billion [a year] to UK coffers is not unreasonably high. In other words, the prize of being in the single market and the prize of burden-free trade with Europe is enormous.
READ MORE: Scottish income tax burden for higher earners 'under review'
“We are a small nation – population of five million people – we are reliant on being outward-looking and internationalist. Brexit pulls up the drawbridge, it locks us down basically and it is knocking money off households and also off the economy.”
Scotland's income tax policy was also in focus in the interview with Ms Forbes.
She declared that the greater income tax burden for higher earners in Scotland relative to the rest of the UK will be kept “under review”, taking into account “how easy it is for taxpayers to shift”.
However, Ms Forbes flagged figures from HM Revenue & Customs showing more people had come to Scotland from the rest of the UK than had moved in the opposite direction, against the backdrop of devolved income tax. And she highlighted the part “progressive” taxation played in funding the £26.70-a-week Scottish child payment for lower-income households north of the Border amid UK austerity.
Asked by The Herald if she thinks there has been too great a divergence in the income tax burden for higher earners in Scotland compared with those elsewhere in the UK as things stand, Ms Forbes replied: “No but I think we keep it under review.
“I was…public finance minister when income tax was first devolved and I recall at the time us making it clear that we would follow the Adam Smith principles of taxation and one of the commitments that we made was to always keep the divergence under review to understand the behavioural impact because I want to be independent but we are devolved and that has implications for how easy it is for taxpayers to shift.”
UKICE, in its report, declares Labour’s EU policy would do little to “address the continuing economic impacts of Brexit”.
READ MORE: Ian McConnell: Touch of sadness as Scottish stalwart loses independence
The think-tank, which flagged a “studied silence” from Labour on Brexit, adds: “Labour has proposed technical changes to the UK-EU trade deal to reduce red tape. However, the report argues that the party has ruled out the measures - rejoining the single market and/or customs union - which would most significantly aid economic growth.”
The UKICE report states: “As for Labour, its red lines on the EU relationship are now well worn - no rejoining the EU, single market or customs union - and the party has proposed some pragmatic steps to improve the working of the TCA (trade and cooperation agreement) and add to it in limited ways, including agreements on mobility, veterinary standards and security cooperation. Any gains from technical improvements will be relatively minimal: useful in reducing trade frictions, but not enough to really address the continuing economic impacts of Brexit.”
It is important this reality is highlighted, especially given both Labour and the Conservatives look like they would far rather the electorate thought there had been no economic damage from Brexit.
My column on the UKICE report in The Herald last Wednesday observed: “Sometimes the thought occurs that such wilful damage surely cannot go on for much longer. The fact that Labour and the Conservatives have both embraced the hard Brexit, however, signals otherwise.”
The Conservatives’ stance on Brexit, while frustrating, is more understandable than that of Labour.
Asked if she was surprised by Labour’s stance, Ms Forbes said: “I am actually and I think it speaks to the disconnect between Labour in Scotland and Labour across the rest of the UK.
READ MORE: Energy and laughter as Kate Forbes looks to be relishing return to senior role
The Tories caused the damage, by delivering a hard Brexit and losing frictionless trade with the UK’s biggest trading partner and the hugely valuable free movement of people between the UK and European Economic Area.
Labour had the opportunity to explain to the electorate what the Conservatives have done. It seems to have decided, however, this is undesirable from a political perspective and it is easier to just embrace the hard Brexit enthusiastically. All of this, apparently, with a keen eye on the “red-wall” voters who swept Boris Johnson to victory in the December 2019 election by switching allegiance from Labour to the Conservatives.
Brexit was also in the spotlight last week in the context of labour and skills shortages in Scotland’s hospitality sector, an issue which deputy business editor Scott Wright analysed in his column in The Herald last Thursday.
Louise Maclean, of Signature Pubs, said: “I would like to see a way for the Europeans to come back to work in our country. We miss them. We miss their work ethic. We miss their drive.”
The woe caused by Brexit, to the economy in general and specific sectors and companies, is clear.
It is good to see this highlighted, even if it is a forlorn hope the UK’s political leaders might listen and move to mitigate the damage.
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