On Europe, Nothing Less than Treaty Change will do

David Cameron says he ‘gets the message’ of the EU elections. But only a fundamental renegotiation will restore trust in the PM

EU Features
Three men (and a woman) in a boat: David Cameron, Angela Merkel, and the Swedish and Dutch prime ministers Fredrik Reinfeldt and Mark Rutte take to the water during the June 2014 summit at the Swedish PM's summer residence in Harpsund (credit: Getty)

For MPs and their party leaders, the summer break brings its temptations, not least to put the lows of the parliamentary year behind them. Will they brush aside the recent elections when voters gave the thumbs down to the three main parties? UKIP, the newcomer, gave both Tories and Labour a run for their money: topping the European poll, coming second in the Newark by-election and polling a decent 17 per cent in the local elections. The Lib Dems were despatched to the bottom of the list, as their socialism at home and EU-ism abroad left voters cold. Labour, though it did win the council elections, saw its overall vote share go down and may have too little momentum for a clear victory in 2015. The Tories lost out to Labour in London, Labour to UKIP elsewhere. But however you look at it, this was a reaffirmation that the majority of voters in this country, whatever their party politics, are conservative by disposition and eurosceptic in view. If the Conservative promise to redraw the boundaries of the European state is to carry the eurosceptic vote, what direction should David Cameron’s renegotiation, a number one priority, take?

First, he will need to convince many conservatives that the changes on which he is intent are no mere window dressing. Even the most loyal party members told their candidates — I was one — that UKIP had a better story to tell. The Prime Minister, they advised, should listen to UKIP. Was it, they asked, “realistic” to think the Germans would give way to us? What power could we bring to overcome Europe’s entrenched interests? For others, Europe had gone too far for reform — too far, probably, to do anything about it other than to leave. My interlocutors were no swivel-eyed loons, but the smart Londoners who told that story from the well-heeled London suburbs. And London was not even a UKIP stronghold. Some were prepared to give the Conservatives the benefit of the doubt and to the European votes added a number of consolation prizes in council elections at the expense of the Lib Dems, turning yellow council seats blue in the leafier parts of Redbridge or Clapham Common.

Farther into central London these voices could also be found, in the expensive urban streets that intersperse the Stalinist postwar estates of inner London. Here too could be found eurosceptics from further afield: Asians and Africans from former colonies who settled proudly in Britain in the postwar decades, but whose families now lament that the country’s unique characteristics, the rewards and quality of life it brought to ordinary people for hard work, enterprise and ambition, have been lost, to all but millionaires. Neighbourhoods are heaving under the strains of overdevelopment; schools, hospitals and transport systems are buckling under the pressures of overcrowding; the quality of life for which they and the country pay is being lost.

The message voters sent was even more pronounced from the regions: UKIP stacking up the votes, Tories holding reasonably well with some losses, Labour too, the Lib Dems collapsing. From the south-east region, the country’s most celebrated eurosceptics, UKIP leader Nigel Farage and Tory MEP Daniel Hannan, topped their party lists. Hannan’s address from Southampton captured the excitement, rebellion and change which was costing others their seats. In the hours and days to come, we would learn that our voters were not alone. Rather, Britain’s sneeze infected many voters in the EU’s founder countries. Significant numbers do not like what they have at present: they want to be dealt a fair hand and to have their priorities recognised and conceded. That means a Europe of sovereign nations must be on the cards.

The Prime Minister recognises as much, and so he has announced. He is now preparing to renegotiate the basis for the UK’s relations with the European Union. The aim is to row back especially on three headline areas which concern voters and where British sovereignty and interests are at stake: to curb the free movement of people (especially automatic rights to access benefits), to reverse the EU’s regulatory burden which hampers global competitiveness for British business. And (though not a Brussels matter) to ensure that Britain’s justice system can protect British citizens, unencumbered by unnecessary interference from the European institutions, including the European Court of Human Rights.

To satisfy British voters, change must be fundamental. Borders must be controlled and the British parliament must have the last word on immigration policy. Access to the benefit system must be subject to the arrangements approved by the British parliament. British business must be freed to compete. For some of these initiatives, especially the control of borders and welfare, treaty change may be necessary. Would the European Council — each of the hydra’s individual 28 heads of state or government — agree? Would their voters back them and ratify treaty changes, as they must, according to each country’s constitutional practice? Germany and Angela Merkel will call the shots. But so far she has not shown herself to be über keen on placating Cameron, while some polls suggest that 40 per cent of Germans would be happy if Britain left the EU.

Cameron’s dilemma is twofold. If he is to realise his goals he needs to embark on treaty change. For this, fellow European leaders need to back him. But will even the French, German, Dutch leaders, the leaders of the founding countries of the EU, the original Benelux six, be keen to let the genie out of the bottle, whatever they may promise their voters in the wake of the European elections? Will they slow the march to the avowed goal of ever closer European union or even cooperate with Britain’s taking another direction on its own?

In Germany, Angela Merkel did not have a good European election, although her CDU/CSU bloc topped the poll at 35 per cent. In fact it had its worst-ever result in a European election despite her presence on its campaign literature. She now faces seven members of Alternative für Deutschland, a reformist though not separatist party opposed to Germany’s membership of the eurozone, in the European Parliament. Seats in the Bundestag are likely to follow. For now, she is saying little about the direction of the new Europe, other than that election results showed the need for Europe to “concentrate on what’s most important, but simultaneously hold to its own rules and treaties”. Meanwhile in her ministries, senior officials are concerned that the political direction of the EU is undermining Germany’s economic base. Some believe free movement must be reviewed, along with open access to benefits and the unquantifiable cost they bring to the German economy; others emphasise the need for institutional and structural reform to foster business and economic growth. Apart from these questions, there will be the cost of bringing the new German-dominated eurozone into line. Unless something gives, the EU and the eurozone will increase the burdens on Germany’s economy at a time when its ageing population has focused domestic attention on the funding needed for pensions and healthcare.

In France, François Hollande’s Socialists dropped to third place after Marine Le Pen’s Front National polled 25 per cent. Hollande also got the message. The EU project, he said, had become “remote and incomprehensible”. That must change. Europe had to be simple, clear and effective where needed and “withdraw from where it is not necessary”. Had he not been so taken with socialist internationalism, Hollande might have heeded the warning signs: the EUs own eurosceptic barometer showed French euroscepticism had mushroomed to nearly 60 per cent in five years; a new Gaullist party, Debout la République, won support from those who could no longer stomach the centre-Right’s craven EU me-too-ism, but could not vote Front National.

In the words of Rachida Dati, former minister under Sarkozy and centre-right MEP for the Paris region, the EU must change direction to meet French concerns. The free movement of workers must be tightened in the battle against social dumping; the competitiveness of workers in small and medium-sized businesses and the open border policy under French adhesion to the Schengen agreement must be renegotiated; enlargement, in particular the accession of Turkey, must be resisted. The clarity of those who say Europe must change is, she adds, “preferable to the beatitudes of those who want to perpetuate the Europe of today whatever the cost to the French”.

Cameron, even more so than Hollande or Dati, backs the nation state. So while the Conservative unique selling point of an in/out referendum will remain a potent message, the Prime Minister will want to make clear what this amounts to.

The Queen’s Speech gave little away beyond a promise to “promote reform in the EU, including a stronger role for member states and national parliaments”. Cameron’s earlier shopping list spelt out some details — the need for greater powers to block unwanted legislation, to liberate business from red tape, to enable the justice system to operate without unnecessary interference from EU institutions and the ECHR, so that free movement is for work, not benefits, and mechanisms to prevent “vast migrations across the continent” put in place.

For business, the first step will be to identify which of the current arrangements benefit Britain’s industries, and which disadvantage the nation’s competitiveness. That must not be sidetracked by the minutiae of red-tape negotiations in which Whitehall officials prefer consensus with their opposite numbers to a decision on what will ensure a successful trading future for Britain, including for the financial services, against the protectionist instincts of rivals in Paris and Frankfurt. 

To prevent economic migration from poorer to richer EU states, and the transfer of wealth that this entails, it is unlikely that anything short of the UK regaining control of its borders would work. The goal should be for parliament, not the EU, to determine who and how many among the EU’s 480 million citizens (and the billions from elsewhere) should be admitted.

Cameron has already linked this question to access to benefit. Should the richer countries be obliged to remain open as a haven to citizens from poorer EU countries where wages are much lower? That question is likely to resonate with Hollande and Merkel, whose own compatriots want to limit open access.

However, the real problem remains curtailing free movement of people. In Britain, the debate has now moved beyond benefit tourism to the the character of the workforce. Do we need to encourage educated, highly-skilled entrepreneurial talent to this country from wherever it hails, in Europe or beyond? Can we limit incomers, with low skills or none, whose jobs are in any case being replaced by digital automation, as countries such as Canada and Australia already do? The Prime Minister will find that the figures show that even those low-skilled immigrants who find work are a drain on the public finances. A study by Smith & Williamson, the accountancy firm,  for the Institute for Fiscal Studies, showed that until a household earns around £35,000 a year it remains a net drain on the public finances, being an overall “taker” rather than breaking even or being a “giver”. Only at that level do the benefits received and the taxes paid cancel each other out.

These will be the big questions if Britain, a European country with a global trading past, is to pay its way in the future. The electorate has moved ahead of its leaders in Western Europe, not least in the UK. David Cameron, who “gets the message” from May’s election, will have his work cut out. If he is to carry the voters in the 2015 general election and realise his goals, he must acknowledge that treaty change will be necessary. Either that, or a commitment to a two-speed Europe with a free-trade union that is separate from the United States of the Eurozone.