In an interview with the Guardian, the Pontypridd MP accused Jeremy Corbyn, the Labour leader, of acting selfishly and warned that his party was “teetering on the brink of being destroyed”.
Smith, whose entry into the race for party leader threatens to derail the hopes of Angela Eagle, who first triggered the contest, said it was clear people wanted both access to the single market and controls on immigration.
But, he added, the public wanted to know what deal would be struck, adding: “And then we should give them another chance. That does mean a second referendum or a general election when the terms are clear. The Labour government should be committing to that.”
Trying to set himself out as a unifying figure with soft-left politics, Smith accused Labour MPs on the left and right of his party of being fatalistic about a split.
“The vast majority of Labour members and Labour members of parliament have been sitting, like in the back seat of a car, as we are careering towards a cliff and someone has got to wrest the steering wheel off the people who are causing this problem,” he said.
He said Corbyn ought to have stepped down in the face of a no-confidence vote from 75% of his parliamentary colleagues, adding: “I think he is being selfish.”
James Schneider – a national organiser for Momentum, the pro-Corbyn grassroots group – said Smith and Eagle were the ones risking a divide in the party. He said his group had mobilised huge support for Corbyn in six days, with 25,000 people attending 35 events. Schneider said the group were using the leadership campaign to try out ways to mobilise for an election. “We’ve learned a lot from Bernie Sanders,” he added. “It is not about changing the face at the top, it is about changing the way we do politics.”
Smith also said it would be better if only one person challenged Corbyn. “Let’s wait and see where we end up. Let’s see who’s got more support,” he said. “Ideally, we would have one candidate, and the clarity of that one candidate versus Jeremy Corbyn.”
The MP said Labour should be sensible and mature about the outcome of the EU referendum. “I think there are many people out there who voted in good faith for Brexit and who felt they were doing the right thing for their families and their communities and I respect them for taking that decision,” he said.
“But I think a lot of people I know are now saying to themselves, ‘It wasn’t the right decision.’ A lot of people are angry that they were quite clearly misled by the Brexit campaign.”
Citing the claim of £350m a week that could be poured into the NHS, Smith said people should see Britain’s exit from the EU more as a journey than a destination.
“What is Labour’s role in this? Our role is to be sensible and mature about this and put our foot on the ball for the British public and say what do the terms actually look like,” he said.
Eagle told the Guardian she supported a similar position on the referendum, agreeing that any rush to implement Brexit should be avoided, and any deal followed by a second vote or election.
Asked why he had challenged Eagle for the leadership when many MPs want to see a single candidate against Corbyn, Smith said: “I think we need the next generation of Labour men and women to step up and put our stamp on this party.”
But he conceded that Eagle’s politics were not “a million millions miles away” from his and disagreed with those who were trying to characterise her as a candidate on the right of the party.
Smith said: “I think she would make an excellent leader of the party and if she were the leader of the party, I would work very happily alongside her.”
But he also claimed Eagle was being “supported by a lot of people who are further right on the spectrum of the Labour party than I am” and hinted that almost 25 years in politics and her support for the Iraq war could prove difficult for her.
Asked about his time as an adviser to Labour MP Paul Murphy, who voted in favour of the war, he said he was openly against Britain’s involvement in the conflict and even offered to resign over it. Smith said Murphy asked him to stay because of his work on the Northern Ireland peace process.
Some MPs backing Eagle expressed fury at Smith’s decision to challenge their candidate, with some pointing to comments he had made after the Iraq war about Labour’s “valuable tradition” of engaging to remove dictators.
Smith said he did believe in the “internationalist tradition of intervention” but felt the arguments were not there in the case of Iraq. Smith also differs from Corbyn on Britain’s nuclear deterrent and is likely to vote for Trident’s renewal next week despite being a former member of the CND.
Smith argued that a further advantage was that he was “not part of any coup or plot to get rid of Jeremy Corybn”, saying nobody called him to ask whether he would resign.
He said that following his decision to step down, he left London to visit his brother in hospital, only to realise a few days later “that Angela Eagle was the only candidate”. He also claimed that he had had “umpteen” phone calls from colleagues urging him to stand instead.
Smith’s key backers include Lisa Nandy, Kate Green and Heidi Alexander, who all also resigned from the shadow cabinet last month.
Smith said he supported Corbyn on a number of issues including anti-austerity but said there had not been any policies to back up the slogan.
“Very often in shadow cabinet when there were difficult discussions about the European Union or economic policy or our attitude to Trident, Jeremy didn’t lead any of those discussions so there was a massive vacuum at the top of our party,” he said.
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