Cameron’s decision to call a referendum is absolutely right

 
Allister Heath
GOOD on David Cameron. He has finally listened to public opinion and agreed to seek a better, renegotiated EU membership deal for the UK. Nobody born after 1957 in the UK has ever had a chance to say what they think of an organisation that controls more of UK public policy than ever before.

Of course, the details of the prime minister’s proposed course of action are not perfect, and all of this could yet come to nothing as the referendum is due to take place after the next election, which Labour will probably win, but this is nevertheless a hugely important moment. Cameron deserves to be congratulated for his courage. He wants to stay in the EU; but understands that without significant repatriation of powers the public will eventually lose patience.

Those who believe in free trade and open markets should not fear this referendum. The business community is divided on the EU, unlike in the 1970s when it almost universally backed joining the common market. Now many, especially smaller firms but also plenty of large ones, support a looser arrangement; they realise that the EU is in terminal decline as a market and resent the endless stream of damaging, job-destroying rules, with Solvency II for insurers merely the latest in an extraordinarily long list.

In the 1970s and early 1980s, it was possible to portray the EU as a liberalising, anti-communist force; these days, it is primarily an engine of anti-democratic corporatism and social democracy, with some important pro-individual freedom elements drowned out by state-building.

It is sad that most banks remain in favour of the status quo, which in reality means progressively greater centralisation. They have got this terribly wrong. Yet business as a whole, like British society is divided; most want to stay in some much looser relationship, if it is possible to negotiate one. That’s also clearly Cameron’s position, though it remains to be seen what he exactly has in mind, and what he is able to negotiate.

A referendum will create uncertainty. But so does holding general elections or referenda on Scottish independence, events which are generally backed by opponents of this particular referendum. Big City firms have got their priorities wrong: the prospect of the Labour party winning the next election and imposing 75 per cent tax rates on bonuses, or the possibility of the EU capping them in an unworkable way, are much greater threats to their business models. Car companies should spend more time worrying about energy regulations or a further collapse in demand for their products caused by the dysfunctional euro. It is strange that these firms – many of which have gone begging for handouts in recent years – are so vocal about opposing any repatriation of political powers to the UK – but so quiet on other issues of far greater relevance to their prospects.

There is a parallel with the 50p tax rate. Supporters (a group which overlaps with pro-EU integrationists) argued it would have no impact on where business chose to locate; London’s pool of talent, language, restaurants and culture would supposedly be enough to keep everybody here. Yet now, suddenly, none of these matter: business is about to run away because of the EU question. These people need to make up their minds.

Above all, the City and business must stop scaremongering. They should focus on getting the right kind of renegotiation which preserves trade and essential freedoms but liberates us of unnecessary interference. If they don’t engage in this debate in a constructive manner, they will have only themselves to blame if they don’t like the final outcome.

allister.heath@cityam.com
Follow me on Twitter: @allisterheath