How the Government could break down over Europe

By Paul Goodman
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It is now possible to see how Conservative discipline and the Government itself could break down altogether over the EU - leading to an election on the present constituency boundaries, in which the party would need a lead of roughly 8 to 10 per cent to win outright.  Such a result would be unlikely, and the most probable outcome of another election would be a second hung Parliament in a row, with all the uncertainties that such an event would bring in its wake.

The course of events would be roughly as follows.  A new EU treaty is proposed in response to the Eurozone crisis.  David Cameron produces a minimal renegotiation of powers proposal, concentrated on repatriating social and employment powers.  This isn't enough for his Euro-sceptic backbenchers.  However, it is too much for Nick Clegg and the Liberal Democrats.  The Coalition thus reaches an impasse over EU policy - and becomes unworkable.

Cameron thus ends up with no alternative but to call an election - perhaps having no option, either, but to pledge a simple in-out referendum in the Conservative manifesto, in which he would campaign with Miliband and Clegg to stay in the EU, but in which Tory Cabinet members, MPs and party members would be able to do as they please (echoing Harold Wilson's tactical handling of Labour's EEC problems in 1975).

All this remains extremely unlikely.  In broad terms, it is in neither the Conservative nor the Liberal Democrat interest to have an election which might well pitch the Conservatives out of office, lose the Liberal Democrats a lot of seats and put Ed Miliband in Downing Street.  In narrower ones, for the Prime Minister to concede an in-out poll would be a last resort, since it would institutionalise his party's differences on Europe - and, in addition, he might lose it.

Furthermore, Wilson's 1975 decision helped to pave the way the creation of the SDP, because it compromised the barriers that had previously separated Labour's euro-enthusiasts from the Liberals.  Anyone in Downing Street considering such a desperate course will presumably bear this in mind.  None the less, politicians sometimes have recourse to last resorts, and it is hard to think of another if the Government's workability breaks down over Europe.

The difficulty for those who believe that Cameron and Clegg will muddle through their problems is that each new development is a reminder of how severe these are.  This morning, the Daily Telegraph reports the Prime Minister as saying that the City is "under constant attack through Brussels directives".  The Guardian's Wintour and Watt blog places his concerns in the context of a narrow treaty change.

This would be made "at the insistence of Germany, to place any new eurozone fiscal rules on a legally watertight footing".  Cameron's priorities in such an event seem to be to protect the City, use negotiations to get the best possible budget deal for Britain, and ensure that the Eurozone countries don't seize control of the single market.  Such a programme would doubtless be acceptable to Clegg, but not to much of the Conservative Parliamentary party - parts of which are preparing to go further.

The Telegraph notes that Tory MPs will meet next month "to begin drawing up a detailed plan calling for the return of employment and social laws".  Such a programme probably wouldn't worry Cameron - after all, it was alluded to in the last manifesto - but might well trouble Clegg, not to mention his party.  And it would certainly have that effect on Conservative MPs and party members.

Most of the former - and probably the latter - aren't Better Off Outers.  But they undoubtedly want a bigger renegotiation package: in many cases, they envisage a negotiated trade deal not unlike that enjoyed by Norway or Switzerland.  Euro-enthusiasts will argue that such a package is simply not on offer.  But whether this is so or not, their insistence will make no impact on a party increasingly exasperated by the EU and all its works.

It hasn't been hard to see Cameron's EU troubles coming.  One would have thought that Downing Street would therefore have instructed the Foreign Office to work on a renegotiation package as an urgent priority.  However, there is no sign that such an instruction has been issued or that such work has been done.  After all, William Hague has recently been stressing that it will be possible to pitch for the repatriation of powers nearer the end of this Parliament - but not now.

The Government was consequently under-prepared for Monday evening's vote and looks unready for a snap treaty change masterminded by Germany.  Senior Conservatives warned the Foreign Secretary during the summer that precisely such an event was looming.  Cameron and Clegg have survived eighteen months or so together, and can probably string out the remainder of the Parliament, too.  But when it comes to the EU, it is becoming harder to see how.