Labour has finally ended its vow of silence on the EU. Photo: Getty
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Labour is right to rebuild EU relations damaged by David Cameron

How the Labour party is moving in the right direction by trying to rebuild relations with our European allies.

It has been a while coming, but Labour has finally acknowledged the need to repair the damage that David Cameron has to Britain’s reputation in Europe.

The shadow foreign secretary Douglas Alexander’s speech in Paris last night was a bit light on substance, but the overall message that a Labour government will seek to build bridges with other European leaders is not before time.

“A key foreign policy priority for an incoming Labour government will be to review, repair and reset relations with Europe upon entering office,” Alexander said, adding that, “no country that seeks to play a leading part in the modern world could contemplate walking away from the world’s largest single market, or to cut itself off from some of its closest allies.”

Labour has kept a vow of silence on all things EU-related for most of the past four years.

On the main issue – whether to hold an "in/out" referendum on EU membership at some point between May and 2017 – Labour has rightly refused to match Cameron’s reckless promise. The referendum pledge is a recipe for paralysis: two more wasted years spent annoying our few remaining allies in Europe at a time when the UK economy and the eurozone remain fragile.

This has made some sense tactically – why enter the debate when you can sit back and watch the Tory party tear itself to pieces? – but it has made Labour look as though it has nothing to say.

Labour could start its bridge-building by giving up on the frankly unseemly rhetorical arms race with the Conservatives on who can talk toughest on EU migration.

Although "welfare tourism" is a far smaller problem than Cameron or, for that matter, Labour, have admitted, it is not just a British concern. The French, Dutch and German governments have all expressed concern about the ease with which migrants from other EU countries can claim welfare and other social benefits in their countries. They just haven’t demanded a rewrite of the EU treaties to deal with the problem. Instead, it can be dealt with through cooperation rather than confrontation and threats.

Demanding treaty change and caps on eastern European migrants to deal with a couple of hundred benefit claimants is like trying to crack a nut with a sledgehammer. Curbing abuse of the benefits system can be achieved through national law – like Angela Merkel’s government in Germany is attempting to do – without insulting the many thousands of Europeans who work hard and pay British taxes.

The UK’s stock in the rest of Europe has seldom been lower.

While most EU governments want the UK to stay, they doubt the Prime Minister’s sincerity as a would-be EU reformer.

A report by the German Council for Foreign Relations last autumn concluded that, while many of Cameron’s proposals for reform were broadly supported in other capitals, no government was prepared to stick its neck out for Britain.

"Some of the UK's criticisms of the EU and proposals . . . are seen as legitimate," the paper states. "What is not seen as legitimate is advancing these as a purely national interest and using the threat of a Brexit as leverage”.

Meanwhile, the constant threats to leave the EU have merely persuaded other capitals that British ideas to reform the bloc cannot be taken seriously.

Even on the issues where Cameron has been right, such as his opposition to Jean-Claude Juncker taking the European Commission presidency or the fiscal compact treaty that he claimed to have vetoed (but in fact had not), tactical mistakes and cack-handed diplomacy have ensured that he was isolated on each occasion.

In Paris, Berlin, Brussels and elsewhere, Labour will be pushing at open doors. The truth is that most European governments, including many of the centre-right, would much rather see Ed Miliband in No 10 in May rather than another five years of Cameron, who has dragged Britain to the brink of an EU exit that he claims not to want.

Now that Britain has reached "the point of no return" in Europe, rebuilding these relationships is vital to our national interest. Taking a leading role in Europe requires allies, not sniping from the sidelines.

Ben Fox is a reporter for EUobserver. He writes in a personal capacity, and tweets @benfox83.

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR