George Osborne attends a press conference at the French Economy Ministry in Paris on April 28, 2014. Photograph: Getty Images.
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Osborne's speech is also an attack on Tory EU withdrawalists

The Chancellor's denouncement of those who want to "pull up the drawbridge and shut Britain off from the world" applies to a significant number in his own party.

George Osborne will not mention Ukip by name in his speech to the CBI today, but it will be clear that he has them in mind when he says:

Political parties on the left and the populist right have this in common: they want to pull up the drawbridge and shut Britain off from the world.

They want to constrain foreign investment in our economy, and deprive us of the British jobs that it has created in industries from car manufacturing to energy. They want to set prices, regulate incomes, impose rent controls, wage war on big business, demonise wealth creation, renationalise industries — and pretend that they can re-establish control over all aspects of the economy.

The Chancellor's attacks on Labour are nothing new (although as a supposed friend of the minimum wage it's odd to hear him denounce Ed Miliband for wanting to "regulate incomes") but more striking is his decision to brand Nigel Farage's party a threat to the economy. In a direct echo of Nick Clegg's language, he denounces Ukip's support for immediate EU withdrawal as an attempt to "pull up the drawbridge and shut Britain off from the world". 

Europhiles will note the irony that it is Osborne's party that has threatened the UK's EU membership by pledging to hold an in/out referendum by 2017. In his interview on Today on Monday, Miliband described the possibility of withdrawal as "the biggest threat to prosperity". Many businesses are far more worried by the Tories' euroscepticism than they are by Labour's proposed energy price freeze or the reintroduction of the 50p tax rate. Martin Sorrell recently revealed that he and others had told David Cameron that "if he were to drop the referendum he would be a shoo-in". That's almost certainly not the case (as Sorrell appeared to forget, most voters support a referendum) but it shows how desperate businesses are for Britain to remain in the EU. 

To this, Osborne would reply that it is only by renegotiating the UK's relationship with Brussels that the government can preserve its membership. As he argued in his recent speech to Open Europe: "If you cannot protect the collective interests of non-eurozone member states, then they will have to choose between joining the eurozone, which the UK will not do, or leave the European Union...I believe it is in no-one's interests for Britain to come to face a choice between joining the euro or leaving the European Union. We don't want to join the euro, but also our withdrawal from a Europe which succeeded in reforming would be bad for Britain. And a country of the size and global reach of Britain leaving would be very bad for the European Union."

But if Osborne is committed to reforming the EU, his contempt for those who favour automatic withdrawal ("they want to pull up the drawbridge and shut Britain off from the world") is also clear. And that is not just an attack on Ukip but on a significant number in his own party. That, in turn, suggests that Osborne is confident that he'll be in government after 2015, potentially as Foreign Secretary, rather than wooing EU opponents in a Conservative leadership election. 

George Eaton is political editor of the New Statesman.

Photo: Getty
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After Richmond Park, Labour MPs are haunted by a familiar ghost

Labour MPs in big cities fear the Liberal Democrats, while in the north, they fear Ukip. 

The Liberal Democrats’ victory in Richmond Park has Conservatives nervous, and rightly so. Not only did Sarah Olney take the votes of soft Conservatives who backed a Remain vote on 23 June, she also benefited from tactical voting from Labour voters.

Although Richmond Park is the fifth most pro-Remain constituency won by a Conservative at the 2015 election, the more significant number – for the Liberal Democrats at least – is 15: that’s the number of Tory-held seats they could win if they reduced the Labour vote by the same amount they managed in Richmond Park.

The Tories have two Brexit headaches, electorally speaking. The first is the direct loss of voters who backed David Cameron in 2015 and a Remain vote in 2016 to the Liberal Democrats. The second is that Brexit appears to have made Liberal Democrat candidates palatable to Labour voters who backed the party as the anti-Conservative option in seats where Labour is generally weak from 1992 to 2010, but stayed at home or voted Labour in 2015.

Although local council by-elections are not as dramatic as parliamentary ones, they offer clues as to how national elections may play out, and it’s worth noting that Richmond Park wasn’t the only place where the Liberal Democrats saw a dramatic surge in the party’s fortunes. They also made a dramatic gain in Chichester, which voted to leave.

(That’s the other factor to remember in the “Leave/Remain” divide. In Liberal-Conservative battlegrounds where the majority of voters opted to leave, the third-placed Labour and Green vote tends to be heavily pro-Remain.)

But it’s not just Conservatives with the Liberal Democrats in second who have cause to be nervous.  Labour MPs outside of England's big cities have long been nervous that Ukip will do to them what the SNP did to their Scottish colleagues in 2015. That Ukip is now in second place in many seats that Labour once considered safe only adds to the sense of unease.

In a lot of seats, the closeness of Ukip is overstated. As one MP, who has the Conservatives in second place observed, “All that’s happened is you used to have five or six no-hopers, and all of that vote has gone to Ukip, so colleagues are nervous”. That’s true, to an extent. But it’s worth noting that the same thing could be said for the Liberal Democrats in Conservative seats in 1992. All they had done was to coagulate most of the “anyone but the Conservative” vote under their banner. In 1997, they took Conservative votes – and with it, picked up 28 formerly Tory seats.

Also nervous are the party’s London MPs, albeit for different reasons. They fear that Remain voters will desert them for the Liberal Democrats. (It’s worth noting that Catherine West, who sits for the most pro-Remain seat in the country, has already told constituents that she will vote against Article 50, as has David Lammy, another North London MP.)

A particular cause for alarm is that most of the party’s high command – Jeremy Corbyn, Emily Thornberry, Diane Abbott, and Keir Starmer – all sit for seats that were heavily pro-Remain. Thornberry, in particular, has the particularly dangerous combination of a seat that voted Remain in June but has flirted with the Liberal Democrats in the past, with the shadow foreign secretary finishing just 484 votes ahead of Bridget Fox, the Liberal Democrat candidate, in 2005.

Are they right to be worried? That the referendum allowed the Liberal Democrats to reconfigure the politics of Richmond Park adds credence to a YouGov poll that showed a pro-Brexit Labour party finishing third behind a pro-second referendum Liberal Democrat party, should Labour go into the next election backing Brexit and the Liberal Democrats opt to oppose it.

The difficulty for Labour is the calculation for the Liberal Democrats is easy. They are an unabashedly pro-European party, from their activists to their MPs, and the 22 per cent of voters who back a referendum re-run are a significantly larger group than the eight per cent of the vote that Nick Clegg’s Liberal Democrats got in 2015.

The calculus is more fraught for Labour. In terms of the straight Conservative battle, their best hope is to put the referendum question to bed and focus on issues which don’t divide their coalition in two, as immigration does. But for separate reasons, neither Ukip nor the Liberal Democrats will be keen to let them.

At every point, the referendum question poses difficulties for Labour. Even when neither Ukip nor the Liberal Democrats take seats from them directly, they can hurt them badly, allowing the Conservatives to come through the middle.

The big problem is that the stance that makes sense in terms of maintaining party unity is to try to run on a ticket of moving past the referendum and focussing on the party’s core issues of social justice, better public services and redistribution.

But the trouble with that approach is that it’s alarmingly similar to the one favoured by Kezia Dugdale and Scottish Labour in 2016, who tried to make the election about public services, not the constitution. They came third, behind a Conservative party that ran on an explicitly pro-Union platform. The possibility of an English sequel should not be ruled out.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.