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There will never be a better time than immediately after Brexit to form a new political party

Summary:
As the vote of no confidence by 80% of Labour MPs after the referendum result showed, Corbyn is at his most vulnerable over Brexit. The 2017 election result may have wiped memories of this painful period, but to say that it shows the vote of no confidence didn’t matter goes too far. Unfortunately Labour still lost in 2017, as their powerlessness over Brexit shows. How do we know that the perception that Labour MPs were deeply unhappy with their leader did not cost Labour in 2017 the crucial votes that prevented them forming a government? Voters seem currently as divided on Brexit as they are by party, and most Labour voters and members want to stay part of the EU. There will therefore be no better time for centrist Labour MPs who are pro Remain to break away and form a new party. When

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As the vote of no confidence by 80% of Labour MPs after the referendum result showed, Corbyn is at his most vulnerable over Brexit. The 2017 election result may have wiped memories of this painful period, but to say that it shows the vote of no confidence didn’t matter goes too far. Unfortunately Labour still lost in 2017, as their powerlessness over Brexit shows. How do we know that the perception that Labour MPs were deeply unhappy with their leader did not cost Labour in 2017 the crucial votes that prevented them forming a government?

Voters seem currently as divided on Brexit as they are by party, and most Labour voters and members want to stay part of the EU. There will therefore be no better time for centrist Labour MPs who are pro Remain to break away and form a new party. When Brexit happens there will be a lot of bitterly disappointed people around questioning where to go from here. That a few Labour MPs have been talking about the possibility of forming a new party is an open secret.

Unfortunately Corbyn has done virtually nothing for members and voters that closely identify with Remain. Hopes have been kept alive by Keir Starmer and occasionally John McDonnell, but neither attended Corbyn’s recent talks with the Prime Minister. The overriding impression given by the leadership and its supporters is that they do not want to antagonise Labour Leavers, and Remainers have nowhere else to go besides Labour. It is never a good idea to give the impression to those closest to you that you take them for granted.

If the objective of this new party is to remake UK politics it is almost certain to fail. But that is not what is important. The key issue is how much damage it can do to the two major parties. One of the lessons of the last two years is that the Conservative vote is pretty solid. Brexit is in a way their Falklands: an issue where they can ramp up the nationalism to maximum and their voters will forget the incompetence and damage to this country their government is inflicting on them. The minority of Conservatives who can see through this will be scared by stories (often false) of what a radical Corbyn government will do.

The new party therefore seems to be mostly a threat to Labour. This is true in part because our future trade relationship with Europe will play a major part in politics from now until the next election. (Those who think that Leaving the EU in March or whenever will stop politicians talking about Brexit will be very disappointed.) If the new party pledges to fight for staying in both the Customs Union and Single Market after we leave the EU, that will tempt Remain voters, because Labour only speak of a close relationship with the Single Market. There is a world of difference between being close and being in: ask any trading firm why. Staying in the Single Market requires Freedom of Movement, and this would allow the new party to attack Labour on immigration, where its recent actions have also made them vulnerable from the perspective of liberal Labour voters.

The problem a new party has is the MPs that are likely to be part of it will find it hard to major on radicalism. Will they really champion immigration, or instead fall back on anti-immigration rhetoric? If they match Labour’s economic radicalism with a kind of nostalgia for how things were before 2016, they will find to their cost that this nostalgia is not widely shared. All of these things mean that the party will fail to capture most Labour supporters. However when it comes to winning the next election Labour do not have supporters to spare. To lose some to a new party could mean another five years for this disastrous Conservative government,

What we can be sure of is that the media, pretty well all of the media, will big the new party up as much as they can. The reason they will do this is that a new party is a threat to Labour rather than the Conservatives. A consequence of the media blitz will inevitably be that some votes, mainly Labour votes, will follow. So whatever line the new party takes, if they are pro-Remain they are quite likely to be a threat to Labour come the next election. 

In economics we talk about ‘barriers to entry’ that prevent new firms entering a market. Some of these are intrinsic, like set up costs for a new firm. But existing firms in the market can also influence whether new firms enter or not. Corbyn’s Brexit strategy so far seems designed to create a ready market of customers who are dissatisfied with Labour’s policy on Brexit. In other words Corbyn is currently creating the conditions in which a new party could enter, and survive for long enough to cost Labour the next election. 



Simon Wren-lewis
Professor of Economic Policy at the Blavatnik School of Government, Oxford University, and a fellow of Merton College. This blog is written for both economists and non-economists.

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