Bernard Jenkin MP: If David Cameron doesn't adopt a clear European policy soon, Labour may beat us to it

Bernard Jenkin is the Member of Parliament for Harwich and North Essex and Chairman of the Public Administration Select Committee.  Follow Bernard on Twitter.

The surprising defeat for the Coalition over the EU budget is a portent of things to come.  Unless David Cameron, George Osborne and William Hague take the Conservative Party out of the present policy-free zone in respect of the UK’s future relationship with the EU, the UK’s relationship with the EU will become more and more dysfunctional, frayed and fractious. The only way out for the Conservative Party is a referendum in this parliament. Wednesday was a watershed for the future of the UK in the EU. Labour’s decision to back euro--scepticism is a game changer. Yes, they were deliberately setting the hurdle of success in the EU budget negotiations higher than is likely to be achieved. Yes, they are hypocritical and all that, but that’s Westminster village talk which cuts no ice with voters. Nor does it nullify the shattering effect of a commons defeat.  That’s why Nick Clegg is so angry: because it is shattering for those who want to maintain our present membership of the EU. For Conservative EU-sceptics, the message of Wednesday is even more profound.

Many Conservatives are bitterly angry that a Conservative Prime Minister should ask MPs to vote in support of continuing massive financial subventions to the EU.  We reflect the views of voters. Moreover, ministers were asking for our support for money which is for funding EU federalism.  Neither the Conservative Party nor voters have ever subscribed to European federalism.  The UK net contribution will rise from today’s £7 billion per year (already several times more than the annual cost of maintaining the Trident nuclear deterrent until 2050) to £9.4 billion by 2014-15.  Even with a so-called “freeze” our net contribution would continue to rise to around £12 billion by the end of the new plan period: more than the entire UK aid budget and getting on for a third of what we spend on the Armed Forces. Moreover, the EU demands ever more, even though their auditors have refused to sign off their accounts for the 17^th year in a row, because they are so “materially affected by error”. This is not simply outrageous; it is toxic for defenders of our present terms of EU membership when you read how they tried to justify opposing a budget cut. 

Nick Clegg railed in his Chatham House speech that pressing for a cut “would cost the taxpayer more, not less because in pushing a completely unrealistic position on the EU budget…[the UK] would have absolutely no hope of getting a budget deal agreed – driving the annual EU bill up instead, over which we would have no veto power at all.”  Think about that!  What an admission! That the EU can grab more British taxpayers’ money, and there is nothing that even the UK Prime Minister backed by the House of Commons can do about it.  This is what an increasing number of UK voters find unacceptable and it is just one example of what they think has gone wrong with our EU membership.  It was the people’s message which finally got through in the House of Commons on Wednesday evening.

The problem for the Conservative leadership is that there will be more such votes and embarrassments in the rest of this parliament, because of the coalition’s non-policy on the EU: an agreement to differ and to do nothing. Ministers can neither deliver a positive engagement with our EU partners on the basis of our present terms of membership, nor can they set out what a different positive relationship would look like. 

The hope is in some Conservative circles that we can string this out until the 2015 election.  The Conservatives would then include a commitment to renegotiate backed by a referendum, but this is pretty hopeless.  What happens if the new shape of the EU is largely settled by then?  What will we then be able to promise to renegotiate?  And the present policy of reviewing “the balance of competences” does not suggest ministers envisage the fundamental change in the UK’s relationship with our EU partners which most people are demanding and which the UK needs.  At a time when the majority of EU states are merging to becoming a single federal state, by means of fiscal, banking and political union, the UK will require a fundamentally different relationship with the EU institutions from the present, including in relation to the single market.

For example, we debate the proposed Eurozone banking union next week.  The government is seeking “safeguards” in the voting arrangements of the European Banking Agency, which covers the whole of the EU.  But such safeguards would make no difference. Once the Euro-states agree on new measures within the banking union, the Commission will propose the same new measures for all banks in the EU, in the name of the single market, whose provisions are decided by qualified majority vote.  The government’s insistence that “Britain’s banks will be supervised by the Bank of England” is no assurance.  Banking is already a “competence” of the EU; the EU has the power.  The UK finds itself increasingly in the worst of all possible worlds: no seat at the top table, and no power to opt out of what the top table agrees.  This is exactly where Nick Clegg and Peter Mandelson want to keep the UK, doing nothing, until it is too late to change it.

A positive future for the UK as a member of the EU requires a far more radical change than nibbling at “competences”. The PM should set out, in positive and cooperative terms, that the UK must maintain a single market with the EU (including a single customs union), but only if we can take back control over our own laws and legal system. The rules of the single market should be agreed, not imposed. This vision is most coherently set out on the EU Fresh Start website here.

This new approach would mean a complete change of tone about the EU.  Instead of acting tough, when we have no power to act tough, it means saying, “Sorry, British people, this is the best we can do for now, but we are laying plans to change this for the future.”  It would also mean saying to our EU partners, “We understand your desire for a federal EU, but we cannot agree to any changes until you understand the UK’s right to a new deal.”  Their first reaction may well be to throw this back in our faces, but we should veto their plans until there they understand that they have to negotiate.

As for the Coalition, the LibDems will have to decide whether to go along with this, or wreck the Coalition because they believe more in the EU than they do in their own country.  Or we could offer them the obvious compromise: a referendum on the question, “Do you want the UK government to negotiate a new relationship with the EU based on trade and political cooperation?” “Yes” or “No?”  Surely we can agree to differ?  Such a ‘mandate referendum’ would not preclude a further referendum on the final deal at a later date.  We better get on with this soon, or Labour might surprise us once more, and beat us to it again.