Cameron's indulgence of Tory fantasies is weakening his hand in Europe

The PM's Ukip-style positioning on immigration is viewed as weakness or blackmail by the rest of the EU.

The best part of a year has passed since David Cameron’s speech promising to renegotiate the terms of Britain’s European Union membership and to put the ensuing deal to the country in a referendum. Since then, there hasn’t been much clarity about the kind of reforms that would persuade the Prime Minister to campaign for the "in" side.

We have learned something about what he doesn’t like. Or rather, we know that he has located the feature of current EU membership that seems most to inflame public hostility – free movement of workers between member states – and wants to be seen to be doing something about it.

On 1 January 2014, transitional controls that have limited the rights of Romanians and Bulgarians to live and work in the UK will be lifted. Nigel Farage is terribly excited by this prospect since it effectively launches Ukip’s campaign for May’s European parliamentary elections without him having to lift a finger. The Tories are putting in all the groundwork, ramping up the issue, reinforcing the impression that a horde of welfare-snaffling foreigners is massing on the border. Voters who are most animated by fear of a migrant tsunami will not believe the Conservatives can hold back the tide.

And they can’t. Cameron understands that free movement is an integral part of the single market. He has given private assurances to the European Commission that Britain will do nothing unilaterally that would breach existing rules. What he hopes to do is persuade other member states that those rules can, in time, be amended. In all likelihood that would mean adjustments to the accession arrangements for any future candidates for EU membership. Retrospectively clawing back rights from existing members or rewriting the very basis on which workers move around the bloc would require treaty revision on a scale that no other country wants to consider.

In other words, when Cameron says he is getting tough over the arrival of Bulgarians and Romanians in two weeks time, what he actually means is that he intends to start a conversation about a possible negotiation about what might theoretically happen with some Croatians at an unspecified point in the future.

Making announcements that sound like Ukip propaganda but without the policy of EU exit to support them is ultimately just an incitement to vote Ukip. Meanwhile, briefings from the Home Office that something drastic will be done serve only to nurture in Tory eurosceptic hardliners the hope that, if they push hard enough, Conservative policy will merge with Farage’s. (The government’s Immigration Bill has already been blown off course by a Tory backbench amendment calling for Britain to renege on its treaty obligations to Romania and Bulgaria.)

This situation is a source of bafflement and rising alarm in other European capitals. Most EU leaders and Brussels officials are prepared to engage with Cameron’s renegotiation ambitions to some extent because, by and large, they want Britain to stay in and they recognise that institutional reform is needed. It helps that the Prime Minister now talks more about pan-European changes than about unilateral "repatriation" of powers. When Cameron goes to Brussels, the carving out of custom-made exceptions for the UK – enjoying all the trading perks of open borders without any of the accompanying social and employment protections – is not seriously on the agenda. Yet that is the only kind of deal that many Tory sceptics would consider acceptable.

When Cameron allows his party to dwell on fantasies of a bespoke British EU package, the rest of Europe starts to lose patience. It is seen as either weakness – a failure to confront the Tory party with a realistic account of what is available in "renegotiation" – or it is viewed as a cynical game, ramping up euroscepticism, making the threat of exit seem ever more likely in the (mistaken) belief that this strengthens Britain’s hand. "We don’t like to use the word blackmail, but sometimes it is the word that comes naturally to your lips," one Commission official tells me.

Perhaps the most surprising element in all this is the Tory party’s willingness to indulge the pretence that Cameron has even embarked on a process of giving them what they want. There is really no evidence that he has. There will be a referendum in 2017, if the Tories form a government after the next election – and that is far from certain. Meanwhile, it remains the Prime Minister’s stated policy to support continued EU membership in that vote. When does he suppose he will fit in the negotiations to secure a deal that doesn’t tear his party in half? He shows no intention of starting soon. Is such a deal even possible? The rest of Europe – led by Germany – is eager to find some accommodation, but they can’t help if they don’t really know what it is that Cameron wants. (And there are divergent views between the parties in Germany’s ruling coalition and within them of how far Berlin should go to accommodate Britain.)

Cameron’s European strategy as it currently stands is to ramp up domestic expectations of a deal that fundamentally changes the basic principles on which the EU operates, while doing none of the diplomacy abroad to make such an outcome even remotely plausible. It is the approach a Prime Minister would take if he didn’t really care one way or the other if Britain stayed in the EU or drifted towards the exit. It is the course that might be expected from a Prime Minister who would rather not engage with the arguments if doing so conflicts with the task of appeasing habitually disloyal backbenchers and fomenting Ukip-friendly, anti-EU hysteria in the process. As a plan for leading the Conservative party that is short-sighted enough. As a way to lead the country it is desperately irresponsible.

David Cameron speaks during a press conference at an EU Council meeting on October 25, 2013. Photograph: Getty Images.

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

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I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.