"Some sort of referendum now appears inevitable, whether triggered by treaty change or because of manifesto commitments". Photograph: Getty Images.
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Only a referendum can solve Britain's European impasse

A public vote offers the best prospect of responding to democratic alienation from the union, and establishing a secure platform for the UK's engagement in its future.

Eurosceptic sentiment has risen sharply in the UK, in common with pan-European trends. The proximate cause has been immigration. Membership of the EU is blamed for the unexpectedly large wave of inward migration that followed the opening up of UK labour markets to citizens of those former communist countries in eastern Europe that have joined the union since 2004.

But the British have always been ambivalent at best about the European project, a tepid attitude that is not satisfactorily explained by recourse to the legacies of the British Empire and the UK's Atlanticism. These traditional accounts of the country’s European exceptionalism ignore more important post-war political and economic factors.

The first of these has to do with sovereign power. For most of the twentieth century, the United Kingdom was an unambiguously unitary state in which executive power was strong and relatively untrammelled. It has never had a written constitution and a constitutional court with codified powers of judicial review. Multi-party government is also rare. Unlike many of its continental partners, therefore, the state has not historically been structured as a series of constraints, checks and balances.

It has prized parliamentary sovereignty over the construction of a Rechtsstaat. Critically, it did not share in the post-war endeavour to promote European cooperation on the basis of what the political theorist Jan-Wener Muller describes as "delegated powers to unelected democratic institutions and to supra-national bodies in order to lock-in liberal democratic arrangements and prevent any backsliding towards authoritarianism."

Where the founder of the European Union consciously sought to tie down the nation state in an interlocking series of internal and external constraints, in the UK, the primacy of parliament and concomitantly powerful executive government remained the lodestar of political identity. In consequence, the pooling of sovereignty in the European Union since the 1970s has been experienced as a process of loss and subjection, particularly amongst sections of the political elite.

Britain’s post-war economic history also does much to explain its Euroscepticism. The decision to join the Common Market in 1973 was a product of declinist sentiment as much as anything else: a view that Britain’s endemic economic weaknesses could only be reversed if it embraced the European social market model. Pro-Europeans in both of the major political parties saw Europe as a means of overcoming Britain’s persistent failure to secure stable class compromise and to coordinate relations between labour and capital in the national economic interest. The collapse of this project in the 1970s amid the turmoil of stagflation and class conflict, and the subsequent neo-liberal reshaping of Britain’s political economy by the Thatcher government, dealt a fatal blow to Europeanism on the right of British politics.

Today, the few remaining pro-Europeans in the Conservative Party are all grandees, slowly shuffling off the stage of history, having long since given way to the Eurosceptics who now dominate their party. Mainstream conservatives are either now dismissive and disdainful of Europe, or actively hostile to it. They are flanked by an increasingly popular, populist and bellicose Ukip, whose name belies the English nationalism at the core of its identity, fed by discontent at the state of England’s two unions, Europe and the United Kingdom.

For its part, the Labour Party followed the reverse trajectory after the 1970s, abandoning its "socialism in one nation" stance to embrace Jacques Delors’s social union in the late 1980s. New Labour then governed in a pragmatic pro-European register after 1997, but maintained a largely liberal market economy and did not need the EU to prosecute its egalitarianism, which rested on the tax and spend apparatus of the national state.

Hence it left Britain after its period of government without deeply embedded structural and political interests in the European project beyond those of the single market, and few anchors for pro-European sentiment.

Consequently, there are limited political and economic resources in contemporary Britain available to those who wish to deepen its European ties. Foreign-owned companies exporting to the single market are a major source of pro-European commitment, as are most large corporates, the trade unions and significant sections of the City. But they are likely to do no more than defend the existing settlement between the UK and Europe, not advance it.

The same is true of the Labour Party, whose space for political manoeuvre is constrained by public opinion and institutionalised Eurosceptisicm in the conservative press. The only way out of this impasse is for Britain to hold a referendum on its membership of the union. That is a matter of regret to many pro-Europeans, as it will bring uncertainty and may deter investment in the UK. But some sort of referendum now appears inevitable, whether triggered by treaty change or because of manifesto commitments entered into by the political parties ahead of the general election in 2015. A referendum will not forever settle Britain’s role in Europe, but it offers the best prospect of responding to democratic alienation from the union, and establishing a secure platform for the UK's engagement in its future.

A full version of this essay appears in Shaping a Different Europe edited by Ernst Hillebrand & Anne Maria Kellner

Nick Pearce is Professor of Public Policy & Director of the Institute for Policy Research, University of Bath.

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How will Theresa May meet her commitment to low-earners?

The Prime Minister will soon need to translate generalities into specifics. 

The curtailed Conservative leadership contest (which would not have finished yet) meant that Theresa May had little chance to define her agenda. But of the statements she has made since becoming prime minister, the most notable remains her commitment to lead a government "driven not by the interests of the privileged few, but by yours." 

When parliament returns on 5 September, and the autumn political season begins, May will need to translate this generality into specifics. The defining opportunity to do so will be the Autumn Statement. Originally intended by George Osborne to be a banal update of economic forecasts, this set-piece more often resembled a second Budget. Following the momentous Brexit vote, it certainly will under Philip Hammond. 

The first priority will be to demonstrate how the government will counter the threat of recession. Osborne's target of a budget surplus by 2020 has wisely been abandoned, granting the new Chancellor the freedom to invest more in infrastructure (though insiders make it clear not to expect a Keynesian splurge).

As well as stimulating growth, Hammond will need to reflect May's commitment to those "just managing" rather than the "privileged few". In her speech upon becoming prime minister, she vowed that "when it comes to taxes, we’ll prioritise not the wealthy, but you". A natural means of doing so would be to reduce VAT, which was increased to a record high of 20 per cent in 2010 and hits low-earners hardest. Others will look for the freeze on benefit increases to be lifted (with inflation forecast to rise to 3 per cent next year). May's team are keenly aware of the regressive effect of loose monetary policy (low interest rates and quantitative easing), which benefits wealthy asset-owners, and vow that those who lose out will be "compensated" elsewhere. 

A notable intervention has come from Andrew Tyrie, the Conservative chair of the Treasury select committee. He has called for the government to revive the publication of distributional analyses following Budgets and Autumn Statements, which was ended by George Osborne last year (having been introduced by the coalition in 2010). 

In a letter to Hammond, Tyrie wrote: "I would be grateful for an assurance that you will reinstate the distributional analysis of the effects of the budget and autumn statement measures on household incomes, recently and mistakenly discontinued by your predecessor." He added: "The new prime minister is committing her government to making Britain a country that works 'not for a privileged few, but for every one of us'. A high level of transparency about the effects of tax and welfare policy on households across the income distribution would seem to be a logical, perhaps essential starting point." 

Whether the government meets this demand will be an early test of how explicit it intends to be in reducing disparities. 

George Eaton is political editor of the New Statesman.