Cameron hears Tory consternation about European budgets and banking union - and receives grilling on in/out referendum

By Matthew Barrett
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Yesterday afternoon, the House of Commons questioned David Cameron on his trip to the European Council. Backbench Conservative opinion being mostly Eurosceptic, the Prime Minister received some testing questions. At the Council, issues like the next European budget and a Europe-wide banking union were discussed, and at home, the issue of a European referendum continues to trouble the Government.

One of the confusions over the Government's intentions is the "new settlement" requiring "fresh consent" which the Prime Minister has hinted at. It has so far been clear what the result of a "no" vote to such a "new settlement" would be. Peter Bone pressed this line of inquiry:

"Mr Peter Bone (Wellingborough) (Con): The whole country will be grateful for what the Prime Minister has done, especially because he has said, if I have understood him correctly, that when he is returned as Prime Minister, without the pesky Liberal Democrats in coalition, he will renegotiate with the European Union and put a referendum to the people in which they can vote yes for the renegotiation or no to come out.

The Prime Minister: ... I think that Europe is changing. The deepening of the eurozone, which will inevitably happen as a result of the problems of the single currency, will open up opportunities for a different and better settlement between countries such as Britain and the European Union. We should pursue that. I have said that we should have both strategic and tactical patience, because the priority right now is dealing with the problems of the eurozone and the firefighting that has to take place, but I think it will be possible to draw up that new settlement and then, as I have said, seek fresh consent for that settlement."

Understandably not content with this answer, Philip Davies argued that Mr Cameron wanted an "in/in referendum":

"Philip Davies (Shipley) (Con): Did the Prime Minister discuss his plans for an EU referendum at the European Council? He may find an in/out referendum undesirable, but I find his in/in referendum equally unacceptable. Only an in/out referendum will do for the British people and it would be very much in the Prime Minister’s best interests if he stopped resisting it.

The Prime Minister: I agree with my hon. Friend about many things, but on this one we do not agree. The problem with an in/out referendum is that it would put two options to the British people, which I do not think really complies with what people want. Many people, me included, are not satisfied with the status quo, which is why the “in” option is not acceptable; but many people—also like me—do not want us to leave altogether, because of the importance of the single market to Britain, a trading nation, so they do not want to be out. That is why I think that an in/out referendum is not the right answer."

Mark Reckless pressed the point again:

"Mark Reckless (Rochester and Strood) (Con): So, the Prime Minister wants to renegotiate our membership of the EU and put the new terms to a referendum. However, will that be an in/in referendum or will a no vote end Britain’s membership of the EU?

The Prime Minister: We are getting slightly ahead of ourselves. We need to use the development of the European Union to seek a fresh settlement. There must then be fresh consent for the fresh settlement. There is time to elapse before that can happen because of the immediate firefighting in the European Union, and we can go on discussing it between now and the next election."

On the issue of the next European budget, Conservative backbenchers frequently spoke up for fiscal restraint and urged the Prime Minister to "stick to his guns" and keep the budget as low as possible. An example:

"Mr Marcus Jones (Nuneaton) (Con): My constituents will be horrified at any suggestion to increase the EU budget or the UK’s contribution to it at a time of such austerity here. I can assure my right hon. Friend that the vast majority of my constituents want him to stick to his guns on the multi-year settlement, to get a good deal for the UK, and to do what is best for the UK. Will he assure my constituents that they will be pleased with the outcome when the time comes?

The Prime Minister: I can certainly give my hon. Friend the assurance that we will stick to our position on that. I cannot tell him when a deal will be done—it does not have to be done this November. The important point is that the British position about not wanting real-terms increases will maintain, whether the deal is done in 2012, 2013, 2014 or at any point in future. That is the key thing that everyone needs to know."

Another frequent cause of Tory interventions was the proposed banking union. A sample exchange:

"Sir Peter Tapsell (Louth and Horncastle) (Con): When the Prime Minister made it admirably clear to Chancellor Merkel that Britain would not permit the European Banking Authority or the European Central Bank to have any control or oversight of the Bank of England, what was her response?

The Prime Minister: The point I would make to Chancellor Merkel—we do not actually fundamentally disagree about this—is that the single currency needs a banking union. At the heart of that banking union will be the ECB, with a new role as a banking regulator. But clearly as this country is not in the single currency our banking regulator will continue to be the Bank of England, and there will not be any question of the ECB having a say over the Bank of England—that is not the situation. Strangely enough, in a way the challenge is to persuade countries of the eurozone to go far enough in having a banking union that will help to break the link between banks that are in difficulty and sovereigns that are in difficulty. Just as we have a solid banking union for our single currency in the United Kingdom, they need a solid banking union for their single currency in the eurozone."

The final question of the session was posed by Dr Julian Lewis, who caused the Prime Minister to say that a European banking union (which Mr Cameron supports) cannot work without full economic and political union as well:

"Dr Julian Lewis (New Forest East) (Con): Thank you, Mr Speaker. Can the eurozone have a banking union that works without that leading to economic and political union too?

The Prime Minister: I think that the short answer to that question is no. Over time, the more there is a banking union and a fiscal union, the tighter the political union will be drawn, because—for instance—German voters having to stand behind Greek deposits, or French voters having to pay for the restructuring of a Spanish bank are deeply political questions. In my view, as the eurozone deepens its commitments, as is inevitable for a working single currency, there will be pressures for further political union, and for further treaties and treaty changes. That is why I believe it is possible for Britain to seek a new settlement and seek fresh consent on that settlement, but we have to show some patience, because right now the issue in Europe is how to firefight the problems of the eurozone—get down interest rates and get the eurozone economy moving—rather than thinking through all of the consequences of banking union and fiscal union in the way that my hon. Friend suggests."

The full session can be read in Hansard here.