It's Tom Watson's attack on Labour's EU referendum policy that should really worry Miliband

The former election co-ordinator's call for an early EU referendum highlights the danger of Labour replicating Tory divisions over Europe.

Ed Miliband rarely goes a day at the moment without some damaging intervention from a Labour figure. With the party holding off on all policy announcements until next month's conference, the vacuum has been filled by malcontents from past and present. The latest example is Tom Watson's interview in today's Guardian. The party's former campaign co-ordinator reminds us that the row over Falkirk remains unresolved, declaring that "a huge injustice has been done" to Karie Murphy, his former office manager and Unite's candidate of choice in the constituency. He adds: "When they finally complete this inquiry they will find out that she hasn't done anything wrong."

But more harmful than Watson's comments on Falkirk (which are merely a reiteration of his long-standing position) are those on Labour's EU referendum policy. No longer bound by collective responsibility, he calls for the party to support an early referendum next May (becoming the most senior figure in the party to do so) and criticises it for allowing the Tories to set the terms of debate. He warns: "Cameron has set the agenda on Europe; he wants a referendum, and if we don't engage with that debate then it won't be on our terms. So I would argue for a referendum next May – get it out the way before the election. That should be Labour's position. Yes to a referendum, and yes to remaining part of Europe."

His stance echoes that of shadow work and pensions minister Ian Austin, who broke ranks last month to call for an in/out EU referendum on the same day as next year's European elections: "[T]he truth is that the UK needs to decide and I would prefer it to do so more quickly. I know this isn't Labour Party policy but my view is that we should have a referendum next year on the same day as the European elections."

Coming out in support of an early referendum is one option that is under regular discussion within the shadow cabinet. It would have the advantage of getting Labour off the hook while also splitting the Tories down the middle. But if and when Miliband makes his move, it will have to be at a time of his choosing. It was the panic with which Cameron agreed to bring forward the draft referendum bill that allowed Labour to frame him as a weak leader who had lost control of his party. If Miliband is to avoid the same fate, he must seek to prevent more interventions like Watson's. A process by which Labour MPs drag Miliband towards a referendum and he eventually capitulates would be a political gift for the Tories.

Labour MP Tom Watson, who resigned as the party's campaign co-ordinator six weeks ago. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.