A group of 29 Labour MPs criticised their leader Jeremy Corbyn on Saturday for failing to take a stronger line on Brexit and demanded that he back continued full membership of the single market.

The statement by the group, led by Chuka Umunna, said any other form of trading arrangement would make working people worse off and mean higher costs for business, fewer jobs and inflated prices.

Others in the group included the shadow minister for transport Daniel Zeichner, serving whip Thangam Debbonaire and 10 former shadow cabinet members.

The decision to release a statement follows disquiet in the parliamentary party last week when Labour whips in the House of Lords ordered Labour peers to vote against an amendment by Peter Hain in favour of membership of the single market.

It is also reflects a wider concern among pro-EU MPs that Corbyn is failing to create a clear dividing line with the Tories over Brexit as Theresa May prepares to trigger the formal article 50 process to leave the EU.

The statement says that membership of the single market would allow Britain to leave the EU without wrecking people’s jobs and livelihoods. “It would give us totally free trade with the biggest market on the planet, with neither tariff barriers to trade in goods nor regulatory barriers to trade in services between the UK and the EU – all whilst not being a member of the EU.

“Confronted with this threat, the British people – leave voters and remain voters alike – are looking to the Labour party to provide leadership and direction as we go forward. It is crucial that we reject the argument that Brexit must mean a trading arrangement that makes the British people poorer.

“Instead, Labour must stand unambiguously for a deal that protects peoples’ jobs and livelihoods and enhances their life chances; not a hard Brexit that could take our economy off a cliff whilst making working people worse off. This requires our party to be full-throated in its defence of Britain’s membership of the single market.”

Umunna, who organised the statement added: “In their 2015 manifesto the Tories made an unconditional commitment to ‘safeguard British interests in the single market’ which is vital to protecting people’s jobs and livelihoods. We must provide a strong opposition to the Theresa May’s pursuit of a ‘hard Brexit’ and not allow them to run away from this pledge. Campaigning for single market membership is vital.”

Keir Starmer, Labour’s Brexit spokesman, has stopped short of calling for full membership but demanded controlled access with tariff-free trade between the UK and EU in a deal that he says would work for both goods and services.

Starmer also takes the view that Labour can argue for an approach that would retain the essential benefits of the single market without having to accept the resulting force of EU law that applies to countries who are full members.