For much of the last week, Keir Starmer’s government has been suggesting that a closer relationship with Europe will be a more prominent part of his agenda in the future.
But it was a little-noted personnel change that might prove the most telling shift: Nick Thomas Symonds, the minister in charge of EU negotiations, was promoted to full cabinet rank.
The Welshman, a close ally of Starmer, will be an advocate of a closer relationship with the EU when ministers meet. But, a source close to the prime minister said, “he isn’t going to bang the cabinet table and say it’s customs union or bust. If that happens, it has to come from Keir himself.”
That would once have seemed very likely: Starmer was long an advocate of a customs union with the EU. Way back in early 2018, the then shadow Brexit secretary came close to quitting the shadow cabinet over attempts to kick his rejoin plans into the long grass.
After two more years of bitter Brexit wars, the new Labour leader whipped his MPs to back Boris Johnson’s deal, arguing that while it was a dud, it was better than leaving Europe with no deal at all.
With that, and his subsequent “red lines” – ruling out a return to the customs union or the single market – Starmer neutralised Brexit after a deeply divisive period for the Labour party and the country.
But in recent weeks, the issue that dare not speak its name has once again gained traction. Why? Because the government is desperately in search of growth.
Where political argument by ardent pro-Europeans failed, cold economic reality has prompted informal discussions across government about rejoining the customs union. Ministers and advisers have been quoting House of Commons analysis that found it could increase GDP by 2.2%.
Before the budget, Minouche Shafik, the prime minister’s economic adviser, suggested that returning to the customs union could be one of the most effective ways of generating growth.
While the idea was rejected at the time, several sources have told the Guardian that further informal discussions inside No 10 on the issue have taken place since.
“The people raising the question in No 10 are right to do so. It’s the only idea around that would radically raise growth at the next election,” said one cabinet source.
Another added: “It’s a very live question. The customs union is one of the big levers that we could pull. But it would be a big decision to do it before the next election.”
The prime minister himself set hares running this week by apparently going out of his way to say he wanted to go beyond the reset deal struck with Brussels in May.
“We must confront the reality that the botched Brexit deal significantly hurt our economy,” he wrote in the Guardian. “One element of our economic renewal will be continuing to move towards a closer trading relationship with the EU.”
In a speech on Monday morning he warmed to this theme, arguing that people would “have to be grown up” about an even closer relationship, and to accept that it would require “trade-offs”.
Later than night, he again talked up the benefits of frictionless trade with the UK’s closest neighbour, telling the lady mayor’s annual banquet: “Wild promises were made to the British people and not fulfilled. We are still dealing with the consequences.”
“In his heart I think Keir would like to go further,” one of the prime minister’s close allies said. “Having been absent from his speeches for a long time, a closer relationship with the EU is now mentioned in every speech.”
Supporters of rejoining the customs union have warned that talking about the economic damage caused by Brexit is not the same as having a solution. “At the moment they’re struggling to get all the things they promised in the reset deal – which were baby steps anyway – over the line.”
Negotiations to join the EU’s flagship £131bn defence fund collapsed last week after France demanded that the UK contribute £5.7bn to EU budgets to allow British defence firms to bid for contracts. Talks on food exports and on energy markets also appear to be stuck.
Despite that, the public mood is shifting, with polling suggesting people are now far less rigid about the red lines. “The public has moved on from Brexit but the Westminster bubble hasn’t,” one senior government figure said.
The drumbeat towards closer ties is reflected in the cabinet, where pro-European ministers including David Lammy, Peter Kyle, Liz Kendall, Bridget Phillipson and Wes Streeting are believed to be among those who would like to see the government go further.
While the issue has not been raised in cabinet meetings and there is no formal strategy being drawn up, in private conversations across Westminster, Labour ministers are debating the economic benefits and the timing of any move.
Lammy, the justice secretary, broke cover – albeit inadvertently – on the News Agents podcast this week when he repeatedly dodged a question on whether the UK should rejoin the customs union.
“That’s not currently where we are,” he eventually responded, before adding: “But you can see countries like Turkey with a customs union seemingly benefiting and seeing growth in their economy and again, that’s self-evident.”
The EU-supporting Tory commentariat has also begun urging Starmer to think about reversing Brexit. Daniel Finkelstein, a close adviser of David Cameron, argued this week it was the logical step for Labour at the next election.
“This is a policy that voters you actually can win over might really want. Your own party would feel enthusiasm for it and be relieved they are finally saying what they actually think and proposing policies that fit together,” he wrote.
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Rachel Reeves, the chancellor, was among the first in government to start highlighting the economic costs of Brexit, back in the summer when she blamed it for the productivity downgrade.
She has also argued that the EU reset would not be a “one off” and the two sides could “do more” in future.
But while she wants to push the relationship as far as possible, she also feels that it should be done within the existing red lines for now, with one source suggesting she was reluctant to take on any more big internal battles.
In private, some cabinet ministers go further, arguing that the government can’t afford to wait until the next election to start talks on rejoining the customs union.
“We want growth. We know this is the single best way of getting it. We could do it now and hopefully start to see the benefits this side of an election,” one told the Guardian.
“We could then challenge Nigel Farage at the next election to either continue with our economic recovery, or to halt it in its tracks and take us backwards.”
While supportive ministers acknowledge that Labour would have to be very careful about breaking another manifesto promise, after the furore over tax rises, they think the public is ready to hear the arguments.
“If we’re planning to get in the car and drive in reverse back to 2016 then we’ll lose the argument. We need to be future-facing. Explain all the economic benefits,” one minister said.
For now, Starmer seems determined to stick to his red lines, telling the Lib Dem leader, Ed Davey, at PMQs on Wednesday that he remained committed to the fundamental architecture of the Brexit deal.
Downing Street sources acknowledge that Starmer is pursuing an “iterative” process with the EU and that at the next annual reset summit, expected in the spring, there will be fresh issues on the table.
They admit this could include “trade-offs” and that the prime minister would be “much more frank” about the damage Brexit had caused the economy, but emphasised that any proposals would “stop short” of the customs union.
There is some frustration inside the government at the prime minister’s reticence. “Keir keeps hinting at it, dipping his toe in the water, then getting scared and rowing back from it,” a cabinet minister said.
“Why are we talking about red lines again? The public has moved on from that. The mood has shifted. A customs union is the obvious thing to do. I’d go further, but it’s a starting point.”
Yet it is not just the prime minister who is cautious. One close ally suggests the enthusiasm of ministers and advisers urging Starmer to go further and faster might be down to their long-held belief in the EU, rather than because it answers the growth problem.
“I would strongly contest whether rejoining the customs union would either be quick or straightforward,” one cabinet source said.
They point out the government would have to give up its independent trade policy and therefore abandon recently negotiated trade deals with the US and India. The UK would no longer have the power to set its own tariffs, as they would go back to being decided by the EU.
Others observe that the politics of the EU has hardened towards the UK, demonstrated by the length of time taken to agree their existing negotiating mandate.
One senior aide noted the turbulent domestic politics of France and Germany, suggesting they could be a block. “Any UK government that tried to rejoin could find the EU instantly turning round and saying we don’t want you.”
But while any moves to go back into a customs union this side of the election look remote, those close to the negotiations are clear where it goes next. “The reality is this: for this parliament we are where we are,” one said. “As for the next one, that’s what this debate is really about.”
