Brexit: Public backs Jeremy Corbyn’s plan to abandon EU state aid rules, poll shows

Britons would sacrifice close trade deal with EU for more state support for industry

Jeremy Corbyn’s plan to scrap restrictions on state support for British industry is popular with the British public – even if it means a looser trade relationship with the EU after Brexit – according to the latest polling.

Labour has said it would stay a customs union with the EU when Britain leaves, but Mr Corbyn has not committed to remaining in the single market – citing freedom from EU state aid rules as his main reasoning. He argues that the UK government should not be “held back, inside or outside the EU, from taking the steps we need to support cutting edge industries and local business”.

Research commissioned by the Institute for Public Policy Research (IPPR) think tank and conducted by pollsters Opinium asked the public to choose between various trade-offs about what the Brexit deal should look like.

When asked to choose between scrapping EU prohibitions on state aid and getting a “far-reaching EU trade deal”, 53 per cent said state aid rules should go, with just 26 per cent saying a close trade deal with the EU should take priority. Twenty-two per cent said they did not know.

The finding on state aid contrasts with other areas of policy: the polling found that the public generally backs staying in alignment with EU rules on consumer, employment and environmental standards in order to get a closer trade deal with the EU – by 49 per cent to 28 per cent. As reported by The Independent at the weekend, people are overwhelmingly opposed to aligning with US rules to get a trade deal from Donald Trump’s administration.

The European Commission generally prohibits state aid for industry under Article 107 of the EU treaties, defining it as “an advantage in any form whatsoever conferred on a selective basis to undertakings by national public authorities”.

The commission, however, provides some exemptions to the prohibition on state aid: airports, cultural and sport organisations and small startup companies all have a block exemption, while other state aid can also be permitted by the commission on a case-by-case basis if it is deemed not to distort competition, affect trade between member states or be selective.

As well as EU state aid rules, the UK is also bound by the less stringent World Trade Organisation agreement on subsidies – though these only apply to international trade and are narrower in scope.

Labour says it could negotiate a deal that “maintains the benefits of the single market and the customs union” but EU negotiators have said that respect for a “level playing field” for industry is a key part of the single market and that the institution cannot be picked “a la carte”.

Theresa May has suggested Britain would likely keep its state and competition rules “in step with the EU” after Brexit and has shown no sign of wanting to opt out of the restrictions. Unlike Labour, she however wants to leave the customs union, arguing that an independent trade policy would allow Britain to strike beneficial free trade agreements with other countries.

In a speech in February, Mr Corbyn said: “Britain will need a bespoke relationship of its own. Labour would negotiate a new and strong relationship with the single market that includes full tariff-free access and a floor under existing rights, standards and protections.

“We would also seek to negotiate protections, clarifications or exemptions, where necessary, in relation to privatization and public service competition directives, state aid and procurement rules and the posted workers directive.

“We cannot be held back, inside or outside the EU, from taking the steps we need to support cutting edge industries and local business, stop the tide of privatisation and outsourcing or prevent employers being able to import cheap agency labour from abroad to undercut existing pay and conditions.”