UK Brexit team seeks to exploit EU concern over Corbyn state aid plans

Exclusive: Chequers plan ties future governments to EU rules on subsidies, negotiators say
Britain’s Brexit negotiators have tapped into growing concerns in Brussels over Jeremy Corbyn’s plans for the British economy, by stressing in recent talks that the Chequers plan would tie any future prime minister to the EU’s evolving rules on state aid in perpetuity, according to EU sources.
The anger of Conservative party Brexiters has focused on the plan to maintain EU regulations in relation to goods, but the UK has privately emphasised its unprecedented offer to bind future British governments’ hands on state spending as part of a deal.
British negotiators have sought to exploit concerns within EU institutions that a Labour government led by Corbyn would re-establish state subsidies, giving parts of the UK’s manufacturing base in particular a competitive advantage.
The Labour leader made a full-throated pitch to blue-collar voters in a speech two weeks ago by pledging to use state aid powers “to the full” to support the sector after Brexit.
The potential re-nationalisation of key sectors of the economy could also alter the trend towards privatisation on the continent, which has been a consequence of the European commission’s objective of greater economic convergence and the creation of a true single market.
Sources close to the negotiations said that in the recent round in Brussels the UK stressed Theresa May’s significant offer on state aid, unseen in any previous free trade agreement.
London has gone beyond the EU’s hopes of a non-regression pledge by including a commitment in its white paper to follow EU state aid laws to the letter as they change over time.
The paper says: “The UK would make an upfront commitment to maintain a common rulebook with the EU on state aid, enforced by the Competition and Markets Authority.”
In response to the suggestion that the proposal was designed to appeal to those concerned about a Corbyn administration, a British government spokesperson said: “The UK has long been a proponent of a rigorous state aid system. This is good for taxpayers and consumers, and ensures an efficient allocation of resources.
“The white paper sets out a clear position on state aid and competition. These are areas where we have a common interest in maintaining discipline on subsidies and anti-competitive practices.”
The EU’s state aid rules prohibit “any aid granted by a member state or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods [which] shall, in so far as it affects trade between member states, be incompatible with the internal market”.
The rules are constantly evolving, however. The EU produced a new code on state aid only last month, clarifying the commission’s central role in enforcing its rules and the requirements made of member states.
The UK’s commitment would restrict the policy options of future governments, as does the pledge to sign up to a common rulebook on goods, over which the former Brexit secretary, David Davis, resigned. He said it would leave parliamentary sovereignty “illusory”.
An EU source said: “The British argument is that given they are taking on such an obligation, the EU should offer more rights in terms of a free trade deal on goods. It is their argument that the EU has just banked the state aid commitment without offering anything in return.”
Corbyn made his distaste for the EU’s “restrictions in state aid and state spending” public last year.
Much of Corbyn’s manifesto for last year’s general election would not clash with the rules, but the proposal for a state investment bank and state-funded regional energy suppliers would likely fall foul. In his speech in Birmingham last month, the Labour leader said: “We want to make sure the government uses more of its money to buy in Britain.”
Labour also wants to renationalise the railways and water industry. The EU does not have a policy on privatisation, although by 2023 it will be mandatory for all contracts to run rail services to be open to tender by both public and private operators.