Cameron's EU referendum may never happen

It is odd to speak of an EU referendum as inevitable when few believe the Conservatives will win a majority at the next election.

Yet again this morning, David Cameron was interviewed about a speech on the EU he still hasn't given. Asked on the Today programme whether the over-hyped address had been completed, Cameron said it was "finished and ready to go" (subsequently amending this to "largely finished").

Once again, he said that he would seek to reach a "new settlement" with the EU before seeking the "consent" of the British people for the changes, a clear promise of a referendum. In his speech, which is now due to be delivered on 23 January (having been pushed back from 22 January in order to avoid clashing with celebrations to mark the 50th anniversary of the Élysée Treaty between France and Germany), Cameron will say that after the next election, a Conservative government would seek to repatriate significant powers from the EU before offering the voters a choice between the new terms and withdrawal.

As such, a referendum is now viewed by most as inevitable. Yet this pledge is dependent on an outcome that increasingly few believe is likely: a Conservative majority at the next election. A reformation of the coalition would likely scupper any plans Cameron has to bring back major powers from Brussels. In addition, it is unclear how Cameron will respond if he proves unable to secure the changes he wishes to see. This morning, he simply told John Humphrys: "I'm confident we will get the changes that we want, we'll have a new settlement and then we'll put that to the British people." Given the obstacles to a referendum, it is surprising how many now speak as if it is a certainty.

Neither Labour nor the Liberal Democrats will immediately match Cameron's pledge to hold an EU referendum, both arguing that it makes no sense to discuss a public vote until the eurozone crisis has been resolved. However, it is also true that they are unlikely to allow Cameron to go into the 2015 election as the only party leader willing to offer the public a say on Europe. The Lib Dems have previously supported an in/out referendum, while senior Labour figures, including Jon Cruddas and Jim Murphy, both argue that a vote should be held at some point in the future. In all probability, then, an EU referendum is coming. But no one should assume it will be Cameron who holds it.

David Cameron speaks during a press conference at the EU headquarters on December 14, 2012 in Brussels. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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How austere will Philip Hammond be?

The Chancellor must choose between softening or abandoning George Osborne's approach in his Autumn Statement. 

After becoming Chancellor, Philip Hammond was swift to confirm that George Osborne's budget surplus target would be abandoned. The move was hailed by some as the beginning of a new era of fiscal policy - but it was more modest than it appeared. Rather than a statement of principle, the abandonment of the 2019-20 target was merely an acceptance of reality. In the absence of additional spending cuts or tax rises, it would inevitably be missed (as Osborne himself recognised following the EU referendum). The decision did not represent, as some suggested, "the end of austerity".

Ahead of his first Autumn Statement on 23 November, the defining choice facing Hammond is whether to make a more radical break. As a new Resolution Foundation report notes, the Chancellor could either delay the surplus target (the conservative option) or embrace an alternative goal. Were he to seek a current budget suplus, rather than an overall one (as Labour pledged at the last general election), Hammond would avoid the need for further austerity and give himself up to £17bn of headroom. This would allow him to borrow for investment and to provide support for the "just managing" families (as Theresa May calls them) who will be squeezed by the continuing benefits freeze.

Alternatively, should Hammond merely delay Osborne's surplus target by a year (to 2020-21), he would be forced to impose an additional £9bn of tax rises or spending cuts. Were he to reject any further fiscal tightening, a surplus would not be achieved until 2023-24 - too late to be politically relevant. 

The most logical option, as the Resolution Foundation concludes, is for Hammond to target a current surplus. But since entering office, both he and May have emphasised their continuing commitment to fiscal conservatism ("He talks about austerity – I call it living within our means," the latter told Jeremy Corbyn at her first PMQs). For Hammond to abandon the goal of the UK's first budget surplus since 2001-02 would be a defining moment. 

George Eaton is political editor of the New Statesman.