David Cameron has a point on Europe: We need a vote, but the time isn’t quite ripe

Mark Littlewood
Mark Littlewood is director-general of the Institute of Economic Affairs.

YESTERDAY’S Tory backbench rebellion over a referendum on Europe has highlighted again how Conservative leaders seem effortlessly capable of creating a political crisis out of a drama whenever the EU edges to the top of the agenda.

To be sure, none of the three main parties have a consistent or honourable record on the question of a Euro-referendum. Labour and the Liberal Democrats promised to let the people decide on the proposed EU constitution, but swiftly reneged on the grounds that it had been relabelled as the “Lisbon Treaty”. But it is for the Conservatives that this issue is truly toxic. The party is no longer divided between those supportive of the European project and those antagonistic to it, but instead splits fairly equally between renegotiators and withdrawalists. The Prime Minister is therefore sailing in very treacherous waters.

However, he has a couple of things going for him if only he’d realise it.

Firstly, his predictions and fears about the European project over the past decade have been shown to be broadly accurate. In stark contrast, those of us who believed, at the time, that the Maastricht Treaty was a plausible recipe for decentralisation and fiscal prudence have a lot of explaining to do.

The debt and deficit obligations of members of the single currency have effectively only been observed in the breach. Reckless spending by the Mediterranean countries was not brought under control. The commitment to subsidiarity (the idea that decisions should be made at member state rather than European level if at all possible) has been shown to be wafer thin, at best.

A European Union genuinely committed to devolving power rather than centralising it would not be hellbent on pushing through a one-size-fits-all directive on the rights of part-time and agency workers. It is this sort of interfering, socialist approach that should lead anyone committed to liberalism and the market economy to question not which country the eurocrats come from, but which planet. When Nicolas Sarkozy loses his temper with the Prime Minister – it is a reflection of the former’s irritation that the latter’s scepticism is being borne out.

David Cameron’s second big advantage is that it looks like he may very soon be in a position to actually convert some of his analysis into policy. If there is to be an Intergovernmental Conference to recalibrate and redesign the EU and to allow its inner core to bind themselves more tightly together, then the UK has real leverage because of our national veto.

Today, a binary decision on “in” or “out” no longer captures the range of options we may shortly face as a country. The three-way referendum proposed by David Nuttall and debated in Parliament yesterday tacitly recognises this. Nuttall argues that the British people should be allowed to choose between withdrawal, the status quo and “a new relationship based on trade and co-operation”. But this third option is too vague. In fact, it might be the option that Angela Merkel, Sarkozy and Herman van Rompuy would plump for. How much co-operation? Over which policy areas? Managed how exactly?

The painful and complex truth is that, within the next couple of years, the UK could face as many as four very different choices. We could opt for complete withdrawal from all European institutions and go for independence. We could go for the Norwegian or Swiss route of EFTA/EEA membership (which would still involve some restrictions on our national sovereignty). We could endorse whatever package of measures David Cameron is able to extract from any new treaty negotiations (presumably involving the UK staying in the EU but in some form of “outer core”). Finally, we could throw ourselves headlong into a more integrated “inner Europe”.

The precise nature – and relative attractiveness – of these four options remains extremely hazy today, but could well come into sharp contrast over the next year or two. That would be the time to allow the people to decide. Vague, aspirational and contestable wording in a 2012 referendum about hypothetical scenarios is a recipe for a meaningless plebiscite. Concrete proposals are needed – even if they are complex ones.

The Prime Minister should commit himself to such a referendum now and within the lifetime of this Parliament. He should say that there are likely to be more than two options on the ballot paper, but we cannot be sure today what those options would be exactly. He would, however, trust the British people to have the wisdom and maturity to select from a menu rather than just say “yes” or “no”. That would be a brave and decisive move. It would probably also go some way to uniting the Conservative party. But, more importantly, it is the right decision for Britain.

Mark Littlewood is the director general of the Institute of Economic Affairs.

City A.M.'s Opinion pages are a place for thought-provoking opinions and views. These are not necessarily shared by City A.M.

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