Jeremy Corbyn: Brexit Vote Boosts Case for State Intervention

Jeremy Corbyn rally
Britain's Labour leader Jeremy Corbyn in Glasgow, Scotland, August 25, 2016. Russell Cheyne/Reuters

Jeremy Corbyn on Thursday urged Theresa May to tear up EU state-aid rules as he issued a rebuttal of the 'free market' economic strategy of successive Labour and Tory governments.

In a speech at Bloomberg's London headquarters as part of his campaign for re-election as Labour leader, Corbyn said: "Any deal with the EU must recognize that the old state aid rules are no longer valid."

The state aid rules disallow governments from supporting a business if it distorts competition within the single market. The Corbyn camp says that the government used the EU rules as a figleaf to try and avoid rescuing the British steel industry after the withdrawal of Tata Steel from the U.K. in the spring.

"The state-aid rules have been used by this government often as a defensive mechanism for their own policy-making," Corbyn said.

Corbyn argued in his speech that the Brexit vote was a vote against free-market economic dogma. "In voting Leave... communities across the country rejected the status quo that had failed them," he said. "This is the failure of an entire economic model to provide the chances and opportunities to a generation of our people.

"Promoted for decades, this model argued that if taxes were slashed for big business and the mega-rich, then everyone would benefit."

The Labour leader also said his own party had not been immune to this mindset during the administration of the New Labour government.

Referring to the former Labour cabinet minister Peter Mandelson, Corbyn said: "Senior members of my party used to say they were, and I quote, 'Intensely relaxed about people getting filthy rich as long as they pay their taxes'."

"The problem was that, while those in my party were relaxing, many of those "filthy rich" were not paying the taxes they should have been."

Promoting his commitments to boosting government investment in infrastructure and developing a more hands-on industrial strategy, Corbyn said: "We cannot be afraid of intervening directly to support supply chains and new industries."

He said that the government could use procurement to do so, and committed to using "high-quality, British-sourced" steel in government-backed infrastructure programmes.

And, Corbyn said, the international tide is turning in his favor: "When governments across the world are intervening, it makes no sense to tie a government's hands here," Corbyn said. "The evidence is clear that strategic, careful interventions can make a difference."