Andrew Lilico: Engaging properly with the Europe issue will build political capital; not doing so will use it up
One of the worst strategic errors made by Cameron and Hague in 2009 came in the immediate aftermath of the decision not to hold an ex-post referendum on the Lisbon Treaty. It was correct not to hold such a referendum, but only if the policy were going to be to seek an early and specific renegotiation of our relationship within the EU that went further than the issues in Lisbon, if we didn't hold an ex-post referendum on Lisbon because we were going to do more than that.
Indeed, at the time of the no-Lisbon referendum announcement, the policy announced was indeed to go further than Lisbon. The policy was fine. What wasn't fine, however, was the emphasis. Hague and Cameron immediately sought to downplay European issues, suggesting that they wouldn't be an early priority and that that economy and public service reform would be.
I'm all for emphasizing the economy and public service reform. But where Hague and Cameron got things terribly wrong was in supposing that the route to a quiet life on Europe was to do as little as possible on it. They appeared to believe that anything they did on the EU would use up political capital that would be better spent elsewhere.
Precisely the opposite was true. The British public had been overwhelmingly against the Lisbon Treaty, and the Conservative Party fought three General Elections in a row promising to renegotiate our position within the EU. The way to a noisy life on Europe, with a divided party, was to try not to do anything about it. The way to a quiet, easy life leading a happy and united Conservative Party always lay in the direction of early and decisive action. The political capital built, both with voters and within the Conservative Party, could have been spent on shoring up confidence in economic and public service reform programmes. If the Party thought you were the chaps doing something on Europe, they were much less likely to undermine you on spending cuts or NHS reform.
Alas, the leadership totally blew it. They have squandered large amounts of political capital trying to avoid acting in Europe. And for what? The European situation has run totally away from us, and our departure is inevitable. What do Cameron and Hague think their stubborn inaction has really achieved?
Is the point some kind of pacifying of the Lib Dems? Surely it's exactly the opposite - a central point of forming a coalition with the Lib Dems rather than a minority administration was precisely to try to shore up the no-action-on-Europe strategy. It isn't that we avoided talking about Europe so as to have a coalition with the Lib Dems. Instead, we had a coalition with the Lib Dems so the leadership could avoid talking about Europe! (It's telling that the reaction of certain government supporters to last night's vote has been to say Cameron will now be less keen on having a small Conservative majority at the next election - preferring another round of coalition with the Lib Dems instead (yeah! - like that's gonna happen!). The leadership sees a small majority or minority administration as making it vulnerable to those in the Party that demand something is actually done on Europe.)
Labour is sniffing an opportunity. Mandelson has proposed an in-out referendum; Ed Miliband is said to have come close to proposing an in-out referendum earlier this summer. Labour will almost certainly propose some kind of referendum at the next General Election. It should not be totally ruled out that Labour could propose a vote on some form of referendum even before the Election (perhaps pre-committing to a referendum held after the Election), hoping to secure enough Conservative rebels to force it through.
Labour has form on this, having destabilised John Major's government by siding with the Maastricht rebels. Some commentators see this as odd, imagining that Labour is fundamentally pro-European. But historically that wasn't so at all; Labour has in the past been more and more consistently Eurosceptic than the Conservative Party. Labour's pro-Europeanism should by no means be assumed to be a settled and unrevisable position. As the Eurozone crisis extends and become ever-more associated with grinding austerity and, in some countries, significant reductions in the conditions for public sector workers and significant labour market reforms reducing "workers' rights", the Labour core vote appetite for European engagement could flip easily and dramatically.
Cameron needs to try to turn this around - to lead the debate instead of being buffeted by it. The EU Budget question is a silly distraction, reflecting obsolete categories. The EU is going to form itself into an explicit federation with an army, police, foreign affairs ministry, treasury and the like. The EU federation budget isn't going to be the same as the EU budget is now or 6.8% higher. It is going to be hundreds of percent higher. Pretending there's an option of cutting that budget or even keeping it the same is just flying in the face of reality, an exercise in denial. Obviously Britain's contribution to the EU budget isn't going to go up by hundreds of percent, but to stop that happening we need to decouple our budget contribution from the formulae that determine the contributions of others. We need to totally renegotiate our position. Indeed, given that in our post-EU-membership relationship with the EU federation we're unlikely to want to be part of the Common Agricultural Policy, and given that that consumes 75% of the current EU budget, there's every likelihood that our post-EU-membership contribution to the EU budget will go down. But that isn't a matter of negotiating this or that tweak to the overall budget. The overall budget's got to go up by hundreds of percent. We can't achieve anything, any more, negotiating within the EU. We can now only negotiate with the EU Federation.
Only once Cameron and Hague properly accept that what we had in the EU - nice though it may have been - is essentially over, and tell us and our EU partners what they have in mind for us to do instead, can they start to restore the confidence of the Party in their policies and rebuild political capital that they can spend, once more, on the economy and public service reform.