Cameron says "renegotiation", Conservative MPs hear "exit"

The Prime Minister's European strategy relies on an act of persuasion that he has proved himself incapable of pulling off.

No-one needs any more evidence that many Tory MPs don’t trust what their leader when he says when it comes to the European Union (or much else). If they did, they would have accepted his pledge in January that a referendum would be held in 2017, once the terms of British membership of the club have been renegotiated - and presuming Cameron is still prime minister after the next election.

But Conservative MPs have found that a Cameron promise doesn’t impress Ukip-minded voters on the doorstep and they struggle to defend their leader’s pledge-keeping credentials. (Members of the PM's entourage calling the activist base "swivel-eyed loons" is not going to quickly thaw relations between the leadership and the grass roots.) Hence the insistence on a bill this side of an election, restating the determination to put EU membership up for a national vote. Number 10 agreed to back such a move out of desperation to prove that the Prime Minister meant what he said back in January.

And no doubt he did. But there are two parts to Cameron’s EU strategy. The referendum is supposed to follow the renegotiation. Much more media coverage and political energy has been consumed on the promise of a vote than on the practicality of getting a good deal out of Britain’s European partners. It is worth noting, for example, that Nigel Lawson’s recent intervention on the subject attracted a great deal of attention because he said he would vote to quit the EU. Less remarked upon was the reason he gave as to why he can be so sure of that decision already. He doesn’t think renegotiation will work. And he’s right.

As I’ve written before, it is almost impossible to imagine Cameron securing a compromise on the UK’s current level of European integration that would satisfy his party because, almost by definition, compromise in Brussels is perceived as capitulation. The EU exists to facilitate cross-border collaboration at a political and not just an economic level and that process is what affronts the sensibilities of the sceptics.

I offer here one modest proof of how phenomenally hard it will be for Cameron to concoct a European settlement to satisfy his members. Writing in the Times last week, Robert Halfon, MP for Harlow in Essex, got stuck into the big oil companies for alleged price fixing. Halfon is a very effective constituency MP, a clever man and a popular figure on the Tory benches. He has been very influential in pushing the sensible idea that Conservatives should be focused on the cost of living and addressing more directly the concerns of working and lower-middle-class voters. He has campaigned on the issue of fuel costs with considerable success. He is respected on both sides of parliament. So what does this have to do with Europe? Halfon explains half-way through the piece:

We need regulators who are hungry for justice, and who have the right powers to pursue it. The Office of Fair Trading should have been pushing the European Commission to investigate, rather than holding last year’s spineless inquiry that came to almost no useful conclusions. Real EU renegotiation would mean bringing these investigatory powers back to Britain.

Halfon is dismayed that British competition authorities appeared to be asleep on the job, leaving it up to the European Commission to get tough on the oil giants. His solution is the repatriation of powers from Brussels. As far as I am aware this doesn’t appear on any list of realistic demands that Cameron might make of his European partners. The UK is subject to European competition law because we are in a single market and because British businesses want a level playing field when trading or merging with businesses in other countries and acquiring assets there. Even if we left the EU, British enterprises that wanted to engage in international commerce would comply with European competition law.

If Tory MPs want the OFT and the UK competition commission (which are in the process of being combined) to be tougher, are they supposed to be more rigorous in the enforcement of European rules? That is a question of greater zeal not repatriation of powers? Or are they supposed to apply some different, yet-to-be-drafted laws? In that case UK companies operating in the rest of Europe would have to comply with two sets of rules instead of one?

But the whole question is purely academic. Cameron will not put powers of competition regulation on his list of things to bring home from Brussels. He knows – if indeed he’s thought about it at all – that it can’t be done. So when Halfon says “real EU renegotiation” he means “impossible, fantasy renegotiation.” Or, put another way, by “renegotiation” he means “exit.” That is what most Tories now seem to mean by renegotiation.

The message from the Conservative party to their leader is clear. There is really nothing he can practically do or say that will persuade them to vote “yes” to the question of whether Britain should remain in the EU. Yet Cameron’s entire strategy hinges on accomplishing that act of persuasion.

David Cameron stands alone in Brussels. Source: Getty

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

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What type of Brexit did we vote for? 150,000 Conservative members will decide

As Michael Gove launches his leadership bid, what Leave looks like will be decided by Conservative activists.

Why did 17 million people vote to the leave the European Union, and what did they want? That’s the question that will shape the direction of British politics and economics for the next half-century, perhaps longer.

Vote Leave triumphed in part because they fought a campaign that combined ruthless precision about what the European Union would do – the illusory £350m a week that could be clawed back with a Brexit vote, the imagined 75 million Turks who would rock up to Britain in the days after a Remain vote – with calculated ambiguity about what exit would look like.

Now that ambiguity will be clarified – by just 150,000 people.

 That’s part of why the initial Brexit losses on the stock market have been clawed back – there is still some expectation that we may end up with a more diluted version of a Leave vote than the version offered by Vote Leave. Within the Treasury, the expectation is that the initial “Brexit shock” has been pushed back until the last quarter of the year, when the election of a new Conservative leader will give markets an idea of what to expect.  

Michael Gove, who kicked off his surprise bid today, is running as the “full-fat” version offered by Vote Leave: exit from not just the European Union but from the single market, a cash bounty for Britain’s public services, more investment in science and education. Make Britain great again!

Although my reading of the Conservative parliamentary party is that Gove’s chances of getting to the top two are receding, with Andrea Leadsom the likely beneficiary. She, too, will offer something close to the unadulterated version of exit that Gove is running on. That is the version that is making officials in Whitehall and the Bank of England most nervous, as they expect it means exit on World Trade Organisation terms, followed by lengthy and severe recession.

Elsewhere, both Stephen Crabb and Theresa May, who supported a Remain vote, have kicked off their campaigns with a promise that “Brexit means Brexit” in the words of May, while Crabb has conceded that, in his view, the Leave vote means that Britain will have to take more control of its borders as part of any exit deal. May has made retaining Britain’s single market access a priority, Crabb has not.

On the Labour side, John McDonnell has set out his red lines in a Brexit negotiation, and again remaining in the single market is a red line, alongside access to the European Investment Bank, and the maintenance of “social Europe”. But he, too, has stated that Brexit means the “end of free movement”.

My reading – and indeed the reading within McDonnell’s circle – is that it is the loyalists who are likely to emerge victorious in Labour’s power struggle, although it could yet be under a different leader. (Serious figures in that camp are thinking about whether Clive Lewis might be the solution to the party’s woes.) Even if they don’t, the rebels’ alternate is likely either to be drawn from the party’s Brownite tendency or to have that faction acting as its guarantors, making an end to free movement a near-certainty on the Labour side.

Why does that matter? Well, the emerging consensus on Whitehall is that, provided you were willing to sacrifice the bulk of Britain’s financial services to Frankfurt and Paris, there is a deal to be struck in which Britain remains subject to only three of the four freedoms – free movement of goods, services, capital and people – but retains access to the single market. 

That means that what Brexit actually looks like remains a matter of conjecture, a subject of considerable consternation for British officials. For staff at the Bank of England,  who have to make a judgement call in their August inflation report as to what the impact of an out vote will be. The Office of Budget Responsibility expects that it will be heavily led by the Bank. Britain's short-term economic future will be driven not by elected politicians but by polls of the Conservative membership. A tense few months await. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.