Losing an EU referendum vote in parliament is part of the Tory plan

MPs just want Cameron to prove he means business (and that the Lib Dems don't).

Most of this morning’s newspapers report that David Cameron is inching towards another significant European concession to his back benches. No 10 is said to be looking carefully at the prospect of an "enabling bill" paving the way for a referendum on Britain’s membership of the European Union. That means, in effect, a vote in the Commons this side of an election underpinning Cameron’s pledge to hold a national vote some time in the next parliament.

Last month around 100 Tory MPs wrote to the Prime Minister calling for just such a move. Some ministers are said to look on the gambit favourably and in a radio interview yesterday, Cameron indicated fairly clearly that it is on his agenda. Specifically, he said the Tories should be prepared to do "anything we can to strengthen the offer."

Cameron’s critics will portray this as a classic capitulation to the right – an entirely predictable lurch deeper into Europhobic territory driven by panic at the prospect of UKIP surging in today’s county council elections. It will confirm the suspicion that Tory eurosceptics are never satisfied. They bank whatever they are given and come back for more, dragging Cameron away from the kind of centrist politics that will win. It is a fairly well-rehearsed argument.

Plainly UKIP’s feasting on stray Tory votes is a lead factor in Cameron’s thinking. But it is worth noting that the pressure for an EU bill isn’t only coming from the hard right of the party. I have spoken to Tory MPs of the modernising tendency – the wettest, most cosmopolitan, liberal fringe – who have urged Cameron to make this move.

Why? Partly it just expresses the fact that the parliamentary Tory party is more or less eurosceptic from top to toe. But more than that, it says something revealing about the awareness Tory MPs have of a critical weakness in their leader’s image. Even those MPs who don’t feel that passionately about an EU referendum recognise that the offer is necessary to shore up a flank against UKIP and they have realised that Cameron’s words alone are a debauched currency. The hope was that his big speech earlier in the year would do the job. It didn’t. The reason, Tory MPs privately admit, is that for most voters, UKIP-leaning ones in particular, speeches, pledges, promises, vows, oaths and "cast-iron guarantees" aren’t enough. No politician who has been on the front line for as long as Cameron can get away with a doe-eyed "trust me on this one, guys" and the Conservative leader has a greater problem with perceived slipperiness than most.

Most Conservative MPs aren’t so naïve as to think that beefing up a referendum pledge with a largely symbolic vote in parliament will stop the Farage insurgency. But they don’t want to go out on the doorstep in the run-up to next year’s European elections armed with only a "David Cameron promise." I’m told by one Tory that this only makes things worse. I’ve also been told that at least one local Conservative party is adopting a kind of purple ticket strategy for would-be UKIP voters in the MEP ballot. They know they are going to be thrashed in June 2014 and don’t want to needlessly aggravate members and supporters, so are saying, in effect, "go on then, have some fun with UKIP in the European elections, just as long as you come back to us for the general election." I suspect there is also quite a lot of don’t-ask-don’t-tell in Conservative associations with regard to voting UKIP in today’s county council polls too.

One other crucial point on the referendum "enabling bill" - it is seen by many Tories as the effective end of the current coalition. They know the Lib Dems won’t go for it, or will try to amend the life out of it, and they don’t care. There is enough confidence that public opinion is on their side that confecting a bust-up with the Cleggites fairly close to a general election would be no bad thing. The argument that MPs are putting to Cameron is that this is a win-win proposition. If the bill succeeds, because Labour or the Lib Dems feel they daren’t oppose it, the Prime Minister has shown great leadership. And if the bill is defeated, it just reinforces the message that coalition is slowing down the business of rescuing Britain from the forces of economic strangulation, that the Lib Dems are now part of the problem not the solution and that what is really needed to unleash national enterprise is a Conservative majority. (That may be a delusion, but it is a popular theory on the Tory benches.)

The very fact that Conservatives are thinking along these lines suggests that, once the June spending review is out of the way, there won’t be any more big joint coalition decisions. The Tories no longer seem so bothered by the prospect of Lib Dems blocking their plans if the ensuing row can be used as a platform to advertise their policies. That is one of intriguing things about the discussion of an EU referendum bill. Cameron might look at the parliamentary arithmetic, calculate that he’d lose a vote – and do it anyway just to make a point.

David Cameron speaks at a press conference at the EU headquarters on February 8, 2013 in Brussels. Photograph: Getty Images.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR