Sir Keir Starmer has declared “we don’t want to diverge” from EU rules in footage of a conference of centre-left leaders in Canada seen by Sky News.
The Labour leader went beyond his usual cautious formulations on Britain’s relationship with the EU at an event on Saturday alongside the Norwegian prime minister, Jonas Gahr Store.
Sir Keir argued that Britain’s relationship with the EU could be much stronger, while still remaining outside the bloc and outside the single market, “the more we share a future together”.
The comments surprised EU diplomats, who believe they are significant.
Leading expert Charles Grant, director of the Centre for European Reform, said that the comments go further than what Sir Keir has said previously, and that Brexiteers might question the point of leaving the EU if the UK does not significantly deregulate.
This is likely to trigger a discussion about the nature of a relationship with the EU and questions from some about whether Britain can maximise the advantages of Brexit if it is largely following EU rules.
The comments are likely to be welcomed by some businesses who do not want to have to operate under multiple sets of rules. However, others who feel held back by EU bureaucracy are set to be disappointed.
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1:52
Sky’s Sam Coates looks at the significance of Starmer’s comments
The remarks were made on Saturday evening. Sir Keir was responding to a question from John McTernan, a former aide to Sir Tony Blair, at a conference for progressive leaders in Montreal.
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“Most of the conflict with the UK being outside of the UK [sic] arises in so far as the UK wants to diverge and do different things to the rest of our EU partners,” the Labour leader said.
“Obviously the more we share values, the more we share a future together, the less the conflict. And actually different ways of solving problems become available.
“Actually we don’t want to diverge, we don’t want to lower standards, we don’t want to rip up environmental standards, working standards for people that work, food standards and all the rest of it.
“So suddenly, you’re in a space where, notwithstanding the obvious fact that we’re outside the EU and not in the [European Economic Area], there’s a lot more common ground than you might think.”
Image: Sir Keir Starmer and Emmanuel Macron. Pic: Presidence de la Republique France
He said there were a lot of shared values and history with the EU, and that on security issues, and NATO, it was good that the conflict in Ukraine brought institutions together – “that has created a wider space in Europe for a discussion.”
Last week, Sir Keir shut down speculationhe might join an EU quota system on migrants after he said he would talk to the bloc about a migrant returns deal.
These comments go much further than Sir Keir went in an interview with the Financial Times on Monday, when he reconfirmed that he would negotiate a better deal with the EU.
Almost everyone recognises the deal Boris Johnson struck is not a good one – “it’s far too thin”, Sir Keir said in an interview, adding: “As we go into 2025 we will attempt to get a much better deal for the UK.”
Mr Grant, who is one of the foremost experts in UK and EU relations, said the comments were new.
“I think if Keir Starmer wants to get the best deal with the prime minister, he’s going to have to prepare the ground, which is why he saw Emmanuel Macron last week, why he probably said some comments when he was in Montreal that were quite interesting,” he said.
“Because he’s trying to soften up the other world leaders, so they know what to expect when he becomes prime minister if he does.”
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0:47
Starmer on plan to tackle people smugglers
Next week, Mr Grant and the CER think tank will publish “a European strategy for Labour.”
Asked if he was surprised by Sir Keir’s comments, he said: “I don’t know whether it was intended or not, and maybe it just slipped out late on the Saturday evening.
“The fact that he hasn’t said anything quite similar in the UK is perhaps telling. Maybe what he thinks is that we shouldn’t diverge too much with the EU because he understands instinctively that it’s actually bad for businesses.”
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Asked if keeping EU rules would undermine the rationale of Brexit, Grant replied: “I think that some of the Brexiteers have a point.
“The only economic case really that backs up Brexit is the idea of Singapore-on-Thames. The idea that if you do leave the EU, you are free to have your own rules.”
Sky News approached Labour HQ ahead of publication.
“We’ve left the European Union and we’re not going back in any form,” a party spokesperson said.
“We don’t support dynamic alignment. We’re not joining the single market or the customs union. We will not be in a situation where we are a rule taker.
“Any decisions on what standards we follow will be made in the UK parliament.
“The Tories have not used Brexit to diverge on food, environmental or labour standards and if they have a plan to do so then they should come clean with people.”
Rachel Reeves has been urged by a think tank to cut national insurance and increase income tax to create a “level playing field” and protect workers’ pay.
The Resolution Foundation said the chancellor should send a “decisive signal” that she will make “tough decisions” on tax.
Ms Reeves is expected to outline significant tax rises in the upcoming budget in November.
The Resolution Foundation has suggested these changes should include a 2p cut to national insurance as well as a 2p rise in income tax, which Adam Corlett, its principal economist, said “should form part of wider efforts to level the playing field on tax”.
The think tank, which used to be headed by Torsten Bell, a Labour MP who is now a key aide to Ms Reeves and a pensions minister, said the move would help to address “unfairness” in the tax system.
As more people pay income tax than national insurance, including pensioners and landlords, the think tank estimates the switch would go some way in raising the £20bn in tax it thinks would be needed by 2029/2030 to offset increased borrowing costs, flat growth and new spending commitments. Other estimates go as high as £51bn.
Image: Torsten Bell appearing on Sky News
‘Significant tax rises needed’
Another proposal by the think tank would see a gradual lowering of the threshold at which businesses pay VAT from £90,000 to £30,000, as this would help “promote fair competition” and raise £2bn by the end of the decade.
The Resolution Foundation also recommends increasing the tax on dividends, addressing a “worrying” growth in unpaid corporation tax from small businesses, applying a carbon charge to long-haul flights and shipping, and expanding taxation of sugar and salt.
“Policy U-turns, higher borrowing costs and lower productivity growth mean that the chancellor will need to act to avoid borrowing costs rising even further this autumn,” Mr Corlett said.
“Significant tax rises will be needed for the chancellor to send a clear signal that the UK’s public finances are under control.”
He added that while any tax rises are “likely to be painful”, Ms Reeves should do “all she can to avoid loading further pain onto workers’ pay packets”.
The government has repeatedly insisted it will keep its manifesto promise not to raise income tax, national insurance or VAT.
A Treasury spokesperson said in response to the think tank report it does “not comment on speculation around future changes to tax policy”.
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Is Britain heading towards a new financial crisis?
Chancellor urged to freeze alcohol duty
Meanwhile, Ms Reeves has been urged to freeze alcohol duty in the upcoming budget and not increase the rate of excise tax on alcohol until the end of the current parliament.
The Scotch Whisky Association (SWA), UK Spirits Alliance, Welsh Whisky Association, English Whisky Guild and Drinks Ireland said in an open letter that the current regime was “unfair” and has put a “strain” on members who are “struggling”.
The bodies are also urging Ms Reeves “to ensure there will be no further widening of the tax differential between spirits and other alcohol categories”.
A Treasury spokesperson said there will be no export duty, lower licensing fees, reduced tariffs, and a cap on corporation tax to make it easier for British distilleries to thrive.
Leave retailers alone, Reeves told
This comes as the British Retail Consortium (BRC) warned that food inflation will rise and remain above 5% into next year if the retail industry is hit by further tax rises in the November budget.
The BRC voiced concerns that around 4,000 large shops could experience a rise in their business rates if they are included in the government’s new surtax for properties with a rateable value – an estimation of how much it would cost to rent a property for a year – over £500,000, and this could lead to price rises for consumers.
Latest ONS figures put food inflation at 4.9%, the highest level since 2022/2023.
The Bank of England left the interest rate unchanged last week amid fears that rising food prices were putting mounting pressure on headline inflation.
“The biggest risk to food prices would be to include large shops – including supermarkets – in the new surtax on large properties,” BRC chief executive Helen Dickinson said.
She added: “Removing all shops from the surtax can be done without any cost to the taxpayer, and would demonstrate the chancellor’s commitment to bring down inflation.”
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