Cameron picks a fight with his party on Europe

Tory MPs will be ordered to vote against holding a referendum on EU membership.

It is an iron law of British politics that Europe will always divide the Conservative Party. Despite his status as a natural eurosceptic, David Cameron is planning to pick a fight with his own party by ordering Tory MPs to vote against holding a referendum on Britain's EU membership. The Commons is set to debate the subject next Thursday and the expectation among many Conservatives was that, as in the case of the vote on prisoners' rights, Cameron would grant backbenchers a free vote. But a report in today's Telegraph suggests that he will instead impose a three-line whip.

For a sense of the political danger involved, note that 46 Tory MPs (out of 58 MPs from all parties) have already signed the motion.

Cameron has always opposed an in/out referendum on the EU but the motion also includes a third option: for the UK to "re-negotiate the terms of its membership in order to create a new relationship based on trade and co-operation." Here's the full text:

The House calls upon the Government to introduce a Bill in the next session of Parliament to provide for the holding of a national referendum on whether the United Kingdom

(a) should remain a member of the European Union on the current terms;

(b) leave the European Union; or

(c) re-negotiate the terms of its membership in order to create a new relationship based on trade and co-operation.

In the eyes of the Tories, Cameron is allowing a good crisis to go to waste. He would do well to heed Tim Montgomerie's warning:

If Britain's relationship with the EU is fundamentally the same after five years of Conservative government the internal divisions that ended the last Tory period in government will look like a tea party in comparison.

But that's not the only headache afflicting the Prime Minister this morning. Boris, who never misses an opportunity to put some clear blue water between himself and Cameron, has been up to his old tricks again, declaring at a press gallery lunch that it would be "absolutely crazy" to respond to the eurozone crisis by accelerating progress towards a fiscal union. The main advocate of such a course of action? Boris's rival George Osborne, of course. In recent weeks, the Chancellor has continually spoken of the need for eurozone countries to accept the "remorseless logic" of monetary union leading to greater fiscal union. Boris's response? "I really can't see for the life of me how that is going to work."

As an aside, it's worth posing the question: where does Labour stand on all of this? There are some in the party, most notably Ed Balls (who rightly boasts of his role in saving the pound), who would like Labour to adopt a more sceptical stance. In July, shadow Treasury minister Chris Leslie led Labour MPs into the no lobby during a vote on bailout funding and reduced the government's majority to just 28 - the smallest of this parliament.

Five Labour MPs, including Frank Field, Kate Hoey and Keith Vaz, have signed the motion so far and more are likely to follow. There has always been a eurosceptic tendency in Labour - many on the left view the EU as a capitalist club - and, with the Tories divided, there's every incentive to cause mischief. But shadow foreign secretary Douglas Alexander, a proud multilateralist, is determined to resist any move to rebrand Labour as a eurosceptic party. Labour must not undermine the argument that global problems require global solutions, he says. As the eurozone crisis enters its endgame, Ed Miliband faces a critical political choice.

George Eaton is political editor of the New Statesman.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.