In a speech on internationalism, the Wigan MP, currently considered an outsider in the race to succeed Mr Corbyn, also criticised the polarisation of the debate over Brexit since the referendum in 2016.
The issue of free movement was divisive in Labour’s ranks as the party thrashed out its Brexit position and it first pledged to end the principle – one of the EU’s key tenants – at the 2017 election.
Labour’s 2019 manifesto said free movement would continue if the UK remained in the EU, but added it would be “subject to negotiations” with the bloc if Brexit went ahead. The party also insisted it recognised the “social and economic benefits” of free movement.
But speaking at the Royal Society of Arts, Manufactures and Commerce, Ms Nandy said on Wednesday: “We should have been bold enough to defend free movement, and the opportunities and benefits it brings.
“But this would have required recognising it has flaws, and not dismissing concerns as simply racist, anti-immigrant sentiment.”
She continued: “We should acknowledge that over decades governments have used the steady influx of skilled labour to cover up a lack of investment in skills and training in the UK and address this.
“I believe in free movement. If it were paired with renewed and radical investment that enabled opportunities for young people, decent jobs, training and skills – then the same concerns would have fallen away.
“I have fought for the rights of migrant workers in the UK all my life and unlike Boris Johnson, I know that the so-called red wall communities do too.”
Ms Nandy also delivered a scathing verdict on Labour’s response to the Salisbury poisoning in 2018, and claimed the party “hesitated in condemning an authoritarian regime” that attacks minorities and invades its neighbours.
“We stood with the Russian government,” she said. “Now with the people it oppresses, who suffer poverty and discrimination. We failed the test of solidarity. The Labour leadership failed on Russia. We must put this right.”
On climate change, she also vowed, if Labour wins power under her leadership, not to sign up to trade deals with countries, such as the United States, unless they have signed up to the Paris climate change accord.
The US provoked widespread concern when it gave notice of its intention to leave the agreement last year, saying the 2015 agreement placed an “unfair economic burden” on the US economy.
Ms Nandy added: “We cannot turn up at the G20 and pledge our commitment to the Paris agreement while continuing to use government money to invest in fossil fuel projects overseas. Or export plastic waste to dump it in South East Asia.
“As we look to forge new trading alliances across the world, we will need to make choices. We should be clear now: we will refuse to agree any trade deal with a country that has not ratified the Paris agreement.
“It is easy to blame Trump as a single destabilising force. But the UK should not rest on this as an excuse for lack of action on a global level.”
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