Michael Heseltine arrives at St Margaret's Church to attend the funeral of Tony Benn last week in London. Photograph: Getty Images.
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Exclusive: Michael Heseltine: EU referendum will have a "chilling effect" on business

Conservative peer also says that Britain will join the euro, that UKIP is a "racist" party and that Boris Johnson shouldn't stand for parliament before 2016.

At 81, Michael Heseltine retains the energy and lucidity of a man two decades younger. He has recently acquired full control of Haymarket, the publishing group he founded in 1957 and that earned him his estimated £250m fortune, and an office in the Treasury, where he serves as a wise elder to cities minister Greg Clark. He remains as keen as ever to have his say on the issues of the day, not least Britain's membership of the European Union. I recently interviewed him for the NS (read the full piece here), and here are the highlights of our conversation.

EU referendum: "chilling effect" on business

If, as Heseltine expects, David Cameron remains prime minister after the next election, a referendum will be held on EU membership by the end of 2017. It is a decision, he warned, that will have a "chilling effect" on business.

It will [have a chilling effect], this will be one of the arguments, an important argument. And industry is beginning to say it ... serious industrialists and our allies - America, Germany - are beginning to express their concerns. This will become a much more articulate debate as time goes on.

He dismissed Cameron's decision to promise a referendum as an act of party management.

“David Cameron is leader of a party and all parties are coalitions and he has to make a balanced judgement. I believe in Britain’s self-interest being pursued through a European agenda, I’m not in favour of referenda on this or any other subject. I know perfectly well that the only referendum we had on the subject was to get Harold Wilson out of a mess in 1975, it wasn’t a strategic ‘we must consult the people’ activity, it was because he had a split party and the only way to reconcile that was to have a referendum. It’s a time-honoured device, but my party criticised at the time and I still, in perhaps a rather naive way, believe the things today that I believed 30 or 40 years ago.”

Britain will join the euro

After Heseltine mocked the eurosceptics for predicting that the economic crisis would result in the break-up of the euro, I asked him whether he believes that Britain will join the single currency. He replied:

Oh yes, one day, one day. We have resisted all these European ventures in my life, we tried to keep out in Messina in ‘55, that was a very bad decision. Then we joined on terms which were not to our liking but were the best we could get. But we tried to compete with them with EFTA, now of course virtually the whole of EFTA has joined the European Union. Margaret Thatcher was no European but she signed the biggest sharing of sovereignty in British history called the Single European Act, she was quite right to do so.

Of the eurosceptics, he said: “What would be quite amusing is to collect the headlines and speeches from the last three years. They tell their own story: they have a dream, which is to get out of Europe, they use the dream to create the headlines and the headlines turn out to be rubbish ... If you think of what they predicted was going to happen to Europe as a result of the euro ...  Day after day, week after week, in the small print, I read Mr [George] Soros is now putting billions back into the Spanish economy, I’d rather trust him.”

UKIP: "There is a racist undertone"

It is the outfit that Heseltine contemptuously refers to as the "UK Isolationist Party" that has driven much of the debate over the EU and immigration. Recalling that he was "the first Conservative to criticise Enoch Powell", he compared Ukip to far-right parties past and present.

“The racial overtones that are within the Ukip movement have got the same motivation [and] psychological impact as Mosley in the Twenties and Thirties, as Powell in the Sixties, Le Pen in France, the hard right in Holland and in Germany. It’s all the same stuff.

He stood by his description last year of the party as "racist".

There is a racist undertone, there’s no question about it.

Boris Johnson: he shouldn't stand for parliament before 2016

The politician most often compared to Heseltine is Boris Johnson, who succeeded him as MP for Henley and who shares his voluminous mane, overweening ambition and love of grand projets. After Cameron’s declaration that he wants Johnson back "on the pitch", Westminster is rife with speculation that the mayor could return to parliament in 2015, leaving him free to stand in any post-election Tory leadership contest. But Heseltine, who failed in his ambition to become prime minister after the fall of Margaret Thatcher ("He who wields the knife never wears the crown," he presciently told New Society in 1986), advised Johnson to wait until after he has completed his second term as mayor in 2016.

He’s obviously going to fight to help Cameron to win, and so he should. I’m totally convinced that he will do everything he can. I think, if I was him, I would be inclined to say: 'I was elected to be mayor of London until 2016; I gave my word to London; I will stick with my word.'

I think that Boris, in his own interests, and he’s fully entitled to see it in his own interests, wants to leave a mark of reliability and dependability and trust and keeping faith with London. After all, it’s 20 per cent of the electorate. That would be an important thing in that calculation. I think he can do everything he needs to do to help the Conservatives. And of course whenever he wants to come back to the House of Commons, he’ll get a seat.

I asked him whether he believed Johnson would make a good prime minister. He replied: "I’m not going to get involved in trying to speculate on that. He will certainly be a candidate, and a perfectly credible candidate, but there are other candidates and one or two obvious people have got very considerable qualifications as well. I’m not going to get involved in being on one side or another. I’m pleased that the Tory party has such a rich seam of talent available to it whenever David Cameron decides to go, which I don’t think will be for some time."

George Eaton is political editor of the New Statesman.

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Why the Liberal Democrats by-election surge is not all it seems

The Lib Dems chalked up impressive results in Stoke and Copeland. But just how much of a fight back is it?

By the now conventional post-Brexit logic, Stoke and Copeland ought to have been uniquely inhospitable for the Lib Dems. 

The party lost its deposit in both seats in 2015, and has no representation on either council. So too were the referendum odds stacked against it: in Stoke, the so-called Brexit capital of Britain, 70 per cent of voters backed Leave last June, as did 62 per cent in Copeland. And, as Stephen has written before, the Lib Dems’ mini-revival has so far been most pronounced in affluent, Conservative-leaning areas which swung for remain. 

So what explains the modest – but impressive – surges in their vote share in yesterday’s contests? In Stoke, where they finished fifth in 2015, the party won 9.8 per cent of the vote, up 5.7 percentage points. They also more than doubled their vote share in Copeland, where they beat Ukip for third with 7.3 per cent share of the vote.

The Brexit explanation is a tempting and not entirely invalid one. Each seat’s not insignificant pro-EU minority was more or less ignored by most of the national media, for whom the existence of remainers in what we’re now obliged to call “left-behind Britain” is often a nuance too far. With the Prime Minister Theresa May pushing for a hard Brexit and Labour leader Jeremy Corbyn waving it through, Lib Dem leader Tim Farron has made the pro-EU narrative his own. As was the case for Charles Kennedy in the Iraq War years, this confers upon the Lib Dems a status and platform they were denied as the junior partners in coalition. 

While their stance on Europe is slowly but surely helping the Lib Dems rebuild their pre-2015 demographic core - students, graduates and middle-class professionals employed in the public sector – last night’s results, particularly in Stoke, also give them reason for mild disappointment. 

In Stoke, campaign staffers privately predicted they might manage to beat Ukip for second or third place. The party ran a full campaign for the first time in several years, and canvassing returns suggested significant numbers of Labour voters, mainly public sector workers disenchanted with Corbyn’s stance on Europe, were set to vote Lib Dem. Nor were they intimidated by the Brexit factor: recent council by-elections in Sunderland and Rotheram, which both voted decisively to leave, saw the Lib Dems win seats for the first time on massive swings. 

So it could well be argued that their candidate, local cardiologist Zulfiqar Ali, ought to have done better. Staffordshire University’s campus, which Tim Farron visited as part of a voter registration drive, falls within the seat’s boundaries. Ali, unlike his Labour competitor Gareth Snell and Ukip leader Paul Nuttall, didn’t have his campaign derailed or disrupted by negative media attention. Unlike the Tory candidate Jack Brereton, he had the benefit of being older than 25. And, like 15 per cent of the electorate, he is of Kashmiri origin.  

In public and in private, Lib Dems say the fact that Stoke was a two-horse race between Labour and Ukip ultimately worked to their disadvantage. The prospect of Nuttall as their MP may well have been enough to convince a good number of the Labour waverers mentioned earlier to back Snell. 

With his party hovering at around 10 per cent in national polls, last night’s results give Farron cause for optimism – especially after their near-wipeout in 2015. But it’s easy to forget the bigger picture in all of this. The party have chalked up a string of impressive parliamentary by-election results – second in Witney, a spectacular win in Richmond Park, third in Sleaford and Copeland, and a strong fourth in Stoke. 

However, most of these results represent a reversion to, or indeed an underperformance compared to, the party’s pre-2015 norm. With the notable exception of Richmond’s Sarah Olney, who only joined the Lib Dems after the last general election, these candidates haven’t - or the Lib Dem vote - come from nowhere. Zulfiqar Ali previously sat on the council in Stoke and had fought the seat before, and Witney’s Liz Leffman and Sleaford’s Ross Pepper are both popular local councillors. And for all the excited commentary about Richmond, it was, of course, held by the Lib Dems for 13 years before Zac Goldsmith won it for the Tories in 2010. 

The EU referendum may have given the Lib Dems a new lease of life, but, as their #LibDemFightback trope suggests, they’re best understood as a revanchist, and not insurgent, force. Much has been said about Brexit realigning our politics, but, for now at least, the party’s new normal is looking quite a lot like the old one.