It is reported that perhaps 90 Conservative back-benchers will meet to discuss the UK’s future relationship with the EU. This is the initiative led by George Eustice, former director of the No-campaign, and other members of the new intake. As George has been at pains to point out, this meeting is not a “rebellion”. Nor is it likely to lead to one. It seems likely that some whips and even ministers will attend. But why are MPs gathering in this way, and what are the questions back benchers will wish to discuss?
Foremost in our minds is the Euro-crisis and its implications. Many warned the Euro would be a disaster, and so it has proved. The sovereign debt default of even just a few of the Euro states will create a crisis far greater than the collapse of Lehman Brothers. George Osborne has decided that the government has no option but to try to save the Euro and to advocate “fiscal union” (ie. an economic government of the EU which can tax, borrow and spend), but the implications of this are enormous. First, could it actually succeed? Some economists say it could, but it is hard to see how the EU will have the political legitimacy to enforce the necessary decisions to make the Euro work. It might buy some time, but many are warning that the longer the Euro is propped up, the worse the defaults will be, and the damage to EU and global economies. The sensible policy would be to call a halt to the bailouts, to encourage an orderly break-up of the Euro, and to limit the potential for default in the future. But that would take an act of Churchillian leadership, ready to face howls of outrage and cries of betrayal.
Should the UK agree to fiscal union at all? Even if only a small number of countries remain in the Euro (so not avoiding the default crisis), fiscal union will consolidate a voting bloc inside the EU, with France and Germany at its heart. They would be likely to vote together on all EU matters, and UK interests would be sidelined. Two Europes, under one treaty, one institutional structure and one European Court of Justice would not be in the national interest. That is why some of us insist there should be no fiscal union without a substantial renegotiation of our terms of membership of the EU and a referendum in the UK.
So what are the realistic options for the government for renegotiation in the present crisis? These are broadly set out in the ConHome poll of Conservative Party Members: they are
- Remain a full member of the EU and carry on with EU integration; or
- Remain a full member of the EU but reject further integration; or
- Renegotiate for new terms of membership of the EU; or
- Leave the EU and negotiate a free trade agreement with the EU.
There are in reality a myriad of options and possible negotiating stances the government could adopt. Today, Open Europe and Policy Exchange are tabling a new idea, “The Case for European Localism” (pdf). This is based on the idea of extending the localist revolution which the government is promoting in the UK to the rest of the EU. However, the question which must be asked about any of these proposals is: what do you do if the rest of the EU will not agree?
Sadly, the government is ill-prepared for the current crisis. When David Cameron determined that we should not “bang on about Europe”, he was in fact deciding to avoid the issue of “Europe” at all costs. There are certainly no policies or plans in place for any initiative or renegotiation. In fact, it appears that reassurances will have been given to the integrationist old-guard. Given the complexity and political upheaval involved in recasting the EU, or our relationship with it, it is understandable that the government wanted to concentrate on sorting out the economy. The fact we are in coalition adds to the paralysis, as William Hague adverted to last week. But where to from here?
It is clear that “we cannot go on like this”. Not only is the EU now paralysed by the EU crisis. The EU is holding back the UK recovery. We are paying too much (our net contribution is rising from some £3.5 billion in 2008-9 to £12 billion in 2014-15) and the vast body of regulation is stifling business and the City of London. It is reported that Steven Hilton is so angry about the Agency Workers Directive that he sought independent legal advice to try and stop it. We have to make the UK competitive to recover. We cannot do that under our present terms of membership of the EU.
60 per cent of Conservative Party Members would like to leave the EU altogether and negotiate a free trade agreement with the EU. This is clearly not an option under this coalition. It is also doubtful that such a proposition would succeed at a referendum unless at least one of the main political parties supported it and had the support of business (the CBI, for example). And we need to be clear that leaving the customs union (ie. putting the UK outside the EU tarrif barriers) would make some UK industrial sectors uncompetitive over night, and that negotiating a free trade agreement to deal with those problems, sector by sector, would be very lengthy.
A large majority of the Party and the public would settle for a different form of membership of the EU. Broadly, we want to be in the customs union, but outside the ambit of the regulation – like Turkey and Norway. We want back control over our borders, control over our laws, control over our fishing and agriculture, and to pay less accordingly. Such demands need to be crafted carefully, must carry broad support in the UK, and be pushed relentlessly. If necessary, Parliament must be prepared to legislate unilaterally, to break the logjam. Or the UK will continue to be dragged along by the sheer might of the EU and events. And this will take time. But the unusual meeting of Conservative MPs today might just be the genesis of something big.