Ignore talk of ‘Tory splits’. The country wants Conservatives and UKIP to co-operate — otherwise Labour will deny us a referendum
David Cameron: The Prime Minister has changed his mind on Europe
Something is stirring. We taste it in the air, we feel its tremors under our soles. Britain is reconsidering the European orientation that has defined its domestic as well as its foreign policy for four decades. And yet, if you relied on the old media for coverage, you would have no idea of the magnitude of what was at stake.
The question of EU membership has vast economic, legal, democratic, diplomatic and constitutional implications. But our newspapers and broadcasters insist on covering it in the most trivial way imaginable as a story about “Tory splits”.
Many lobby correspondents are stuck in the early 1990s, determined to press every event into their petty Westminster narratives. When, to pick a more or less random example, Nigel Lawson, the author of Margaret Thatcher’s tax reforms, wrote a calm and measured article concluding that the economic balance of advantage had now shifted against continued membership, no one stopped to ask why a successful Chancellor, who knew a thing or two about finance, had changed his mind. Instead, out came all the hackneyed phrases and mixed metaphors that signal when journalists aren’t bothering to think about what they’re writing. Nigel Lawson, chorused the lobby, had “lobbed a hand grenade” into his party, which was now “split from stem to stern”, “picking at the scab”, “causing a major headache for David Cameron”, “consumed with infighting” etc.
Quite apart from missing the point, such analysis isn’t true. Most Eurosceptics — which is to say, most voters — were pleased when the Prime Minister announced a referendum on continued membership. Labour and the Liberal Democrats are on the wrong side of public opinion, and they know it. Their spokesmen perfunctorily try to claim that Mr Cameron has been pushed into the referendum by (boo! hiss!) The Tory Right. But who are these nasty Rightists who have been demanding a referendum? Depending on which opinion poll we believe, they are anywhere between 62 and 82 per cent of the electorate.
When the Conservatives moved the Bill for an In/Out referendum, Labour and the Lib Dems were too cowardly to oppose it openly, instead telling their MPs to stay away and relying on parliamentary procedure to talk the legislation out — though several individual Labour MPs keenly want a referendum. The Conservatives, in other words, are united, and in tune with public opinion. The other parties are divided, and at odds with their own supporters. Who has the greater problem?
It’s true that a tiny number of irreconcilables, some in the Conservative Party and many more in UKIP, have become so hostile to David Cameron that they no longer trust anything he does. Their response to the In/Out referendum commitment was rather like that of American Leftists when George W. Bush announced the African aid programme they had been demanding: “Yuck! We never wanted this from you!”
They’re right to say that the PM has changed his position on the EU issue. Seven years ago, in his first conference speech as Tory leader, he told his party: “Instead of talking about the things that most people care about, we talked about what we cared about. While parents were worried about getting the kids to school, we were banging on about Europe.” So why is he banging on about Europe now? Two reasons.
First, he has come to see in government, as he did not in opposition, how tightly Brussels controls our domestic affairs. The example that he gave in that 2006 speech — parents worried about getting their kids to school — is instructive. I remember the moment well. My elder daughter had gone to school for the first time a couple of weeks earlier, and what was exercising parents at her school gates was the law that required us to ferry our children around in child car seats until they reached the age of 12 — a law that turned out to have come from the EU.
Whether or not booster seats are desirable for 11-year-olds, it is hard to see why they need to be decreed at a continental level. It’s the same story with bin collections, home information packs, driving tests, vitamin supplements and hundreds of other essentially domestic issues which are now decided by Brussels.
In opposition, one Tory moderniser told me that the EU was “an optical issue”. His support for it, he frankly admitted, owed less to any cost-benefit analysis than to a sense that Euroscepticism made the party look dyspeptic. Now that he is in government, dealing with Brussels directives, he has changed his tune.
The second, and bigger, change has to do with developments within the eurozone. Instead of inferring from the agonies of Spain, Portugal and Greece that you can’t apply a single monetary policy to widely divergent economies, Eurocrats have hastened their plans for political and economic amalgamation: debt pooling, euro-bonds, a common finance minister, tax harmonisation.
Since almost no one argues that Britain should join the euro, a different deal is inevitable. Remaining where we are and keeping the pound is not an option, because the political and fiscal union now under way is not confined to the 17 eurozone members. The President of the European Commission, José Manuel Barroso, made clear in May that what he called the “intensified political union” must apply equally to the states that had kept their currencies. “This is about the economic and monetary union, but for the EU as a whole,” he added, for the avoidance of doubt.
The EU of which we have been members for four decades is, in practical if not legal terms, ceasing to exist. The question is what kind of relationship we shall have with the single currency area.
At one end of the spectrum sits Sir Humphrey in Brussels. Our EU officials, being human, tend to confuse their presence at the negotiating table with the national interest. They want to opt out of as little as possible, and hope for a 1975-style renegotiation, in which tiny, optical changes are dressed up as a major new deal. No doubt the other heads of government will be lined up to play their parts (“Ach! The swine Englanders have outfoxed us!”), but I doubt the electorate will fall for it.
At the other end are those, like me, who want to opt out of all political structures, and remain only in a free market. The outcome of any referendum will in all likelihood depend on where along that continuum the eventual deal is struck.
Why, we’re often asked, should the other member states allow Britain to pull out of the non-market mechanisms? Well, why not? What would they be losing? Britain runs a massive trade deficit with the rest of the EU and, in February, overtook France to become Germany’s biggest export market. Why should salesmen attack their customers?
I’ve noticed in the European Parliament that even the most openly anti-British MEPs — such as Guy Verhofstadt, the former Belgian prime minister who now leads the Euro-Liberals — accept that, in any new dispensation, Britain would remain in a European free trade area. Indeed, the most hardline Euro-integrationists propose such a deal, not as a final offer, but as an opening bid. Jacques Delors, who once incarnated everything that Britons disliked about the EU, now calls for the United Kingdom to be offered what he calls a “privileged partnership”, envisaged as free trade and intergovernmental co-operation, but non-participation in political structures. The Union of European Federalists have called for the same thing; they call it “associate membership”.
The PM is probably closer to the Sir Humphrey end of the renegotiation spectrum than to the Hannan/Delors end. But, in the end, neither he nor I will get to decide whether the deal is good enough; that decision will be made by the electorate as a whole. And, if the opinion polls stay as they are, a future government might find itself having to strike a far more radical deal than David Cameron now envisages.
If Britain succeeded in getting a trade-based form of associate membership, others would be likely to follow. Several of the more maritime, free-trading members have the same criticisms of the EU system that we have. It’s not hard to envisage Sweden and Denmark wanting a similar dispensation. Nor, indeed, to imagine some states currently outside the EU, such as Norway and Switzerland, joining in. We could create a continent-wide free trade area, with perhaps 35 or 40 members, stretching from Iceland and the Faroe Islands to Turkey and Armenia, containing within it a tighter core of perhaps 20 states that had chosen to merge their political and economic systems. Wouldn’t that leave all sides happier?
If such a deal is not on offer, Britain should leave. That prospect, I notice, no longer frightens Euro-enthusiasts the way it did. Even committed supporters of membership now generally concede that the case is weaker than it was. Every continent on the planet is growing except Europe and Antarctica. Britain’s exports to the EU have fallen in four years from 52 per cent of the total to 43 per cent, and are now plummeting by the month.
The central economic fact of the 20th century is the growth of a consumer class in what we still think of as the developing world. But we cannot fully exploit the opportunities across the oceans while we remained cribbed, cabined, confined in our customs union.
One example will serve to illustrate our problem. As I write, the EU is on the brink of a trade war with China, which has retaliated against the imposition of “anti-dumping measures” on its solar panels. Britain keenly wanted to buy cheaper Chinese solar panels but, having surrendered its trade policy on January 1, 1973 when it joined, was obliged to go along with Brussels protectionism. We are thus penalised both positively and negatively, unable to buy the most competitive wares, and hindered in our exports by retaliatory tariffs.
Yet in April of this year, almost unnoticed, non-EU Iceland, with a population of 320,000, signed a comprehensive free trade accord with China. Norway and Switzerland, being outside the EU, are following suit. Britain, being inside, cannot. Given that China grew by 7.8 per cent in 2012 while the EU shrank by 0.2 per cent, I’d call that a serious disadvantage. Norway and Switzerland are fully covered by the so-called four freedoms: free movement of goods, services, people and capital. The Norwegians sell two-and-a-half times as much per capita to the EU as we do, the Swiss four-and-a-half times. It’s just that they can sign bilateral deals outside the EU, too.
It’s hard to see the British electorate voting for a renegotiation that stopped short of a Swiss-style relationship. Although some Eurosceptics can’t bring themselves to admit it, we are winning.
Indeed, the only way to ensure we lose is to split the Eurosceptic vote. Consider what happened at the recent Eastleigh by-election. The Conservative and UKIP candidates, running on almost identical right-of-centre anti-EU platforms, between them secured 53 per cent of the vote. Both lost, allowing the Euro-federalist Lib Dem to win on 32 per cent. What if such a result were to be replicated around the country at the general election?
Like all tragedies, this one could be avoided. For 20 years, Eurosceptics in general, and UKIP in particular, have been demanding a referendum on leaving the EU. As recently as last September, Nigel Farage, UKIP’s impressive and patriotic leader, said he would deal with the Conservatives only if their commitment to a referendum were “written in blood”. Since then, the Tories have adopted the policy, moved the Bill, backed it on a three-line whip and established a national campaign, LetBritainDecide.com, to push for a vote. Short of literally writing in blood, it’s hard to see what else they could do.
What form an entente with UKIP might take would be decided at a higher level than mine. Ideas range from a narrow agreement not to field separate candidates in seats such as Eastleigh, through to more ambitious plans for an eventual merger, as happened in Canada between Reform and the Progressive Conservatives. I was encouraged to hear Nigel Farage cite the latter model in his speech at the UKIP conference.
What is clear is that, in the absence of an accommodation, even a desultory national vote would put Ed Miliband into Downing Street. Surely Britain deserves better than that.