Could George Osborne's leadership ambitions deliver a referendum on the EU?

By Paul Goodman
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Newsnight's Allegra Stratton started it all, sending out a tweet on April 25 as follows:

"Think that over the next 18 months an EU referendum will become a more concrete prospect, vg sources across main parties now toying with it."

And she returned to the theme on May 4:

"Mandelson's call for a referendum today chimes with thinking inside the government. Would be a way to stymie prob UKIP 2014 MEP gains."

Yesterday, James Forsyth wrote on Coffee House:

"One source intimately involved in Tory electoral strategy told me recently that a referendum in the next manifesto was ‘basically a certainty’. The only debate now was about what ‘sequencing’ the manifesto should propose: renegotiate Britain’s membership of the European Union and then hold a referendum on the result, or hold a referendum asking for permission to go to Brussels and renegotiate.

My understanding is that, at the moment, the favoured option is to propose renegotiation, followed by a referendum on the new arrangements within 18 months. During the campaign, the Tories would argue for staying in if new terms could be agreed but leaving if the rest of Europe refused to play ball."

I believe that both Ms Stratton and Mr Forsyth are on to something, and that as I've written before we're drawing nearer a referendum on the EU, because of the following factors:

• Growing pressure from Labour.  Miliband has a good reason to suddenly call for an EU referendum, probably an In-Out one: it would divide the Conservatives - on staying in or pulling out - out-manoevre Cameron, and show leadership.  He also has a good reason to continue not to call for one: namely, that he risks Labour's euro-enthusiasts - such as Tony Blair and perhaps his brother - attacking him for opportunism if he does.  They might argue that he is risking Britain's position in the EU.  However, the recent pro-EU referendum intervention by Peter Mandelson was very significant, signalling that Labour's pro-EU wing might not now oppose a referendum - and thus widening Miliband's options.

• The revolt of the 81.  This was a watershed, signalling that most of the Conservative Parliamentary Party now want a referendum of some kind.  (Yes, "most": very many MPs and Ministers voted against a referendum as an act of reflexive loyalty to David Cameron, not because they're against a poll.

• The presence of UKIP.  Evidence suggests that UKIP's vote is primarily an anti-politics vote, not a Euro-sceptic vote, but a Conservative referendum pledge might help take the wind out of Nigel Farage's sails, as David Cameron's pre-Christmas veto undoubtedly did: the Tories soared in the polls afterwards.

• The rolling People's Pledge campaign.  The organisation's campaign for an EU referendum got a 30% turnout in Thurrock, the only one to date, which is very respectable.  It is now planning to move on to 12 more seats.  These rolling ballots have the capacity to be get under the skin of Number 10 (and Labour).

• Above all, the drive to fiscal union.  The EU is moving towards ever-deeper union in response to the Eurozone crisis.  A new polity would make a referendum impossible to avoid, as Lord Mandelson seems to recognise.

There is also another force as work.  Forsyth also wrote:

‘Boris wants to present himself as the man of destiny who’ll free us from our European bondage,’ one insider says. ‘So a referendum would shoot his fox just as much as Ukip’s.’

This would sound to me like "sources close to George Osborne", even had Conservative MPs not told me yesterday that the Chancellor is floating the possibility.  After all, cui bono: which senior Tory has the biggest interest in "shooting the fox" of a potential leadership rival? 

A referendum pledge in the next manifesto would also be the kind of bold stroke that Mr Osborne, with his gambling instinct, can sometimes deliver.  Remember the proposed inheritance tax and stamp duty cuts in 2008 that helped to deter Gordon Brown from calling a general election.

The Chancellor knows that the centre-right is the dominant force within the party, that it wants an EU referendum of some kind, and that he can't become leader without its support.  He will also want to close off Mr Miliband's options (and needs to do so soon).

As I pointed out recently when writing about Lords reform and the boundary review, Mr Cameron will find it very hard to win a majority even after the seat reduction.  An EU referendum pledge could perhaps make the difference - and set Mr Osborne up as his successor.

I am all for a referendum.  But every silver lining has a cloud or two, for Tories at least, and in this case these include the following questions.

• Does Number 10 agree with the Treasury view?

• If so, what happens if Mr Cameron wins the election, puts his renegotiation plan to other EU countries, and is told by France and Germany to bog off?  Suppose he then campaigns to pull out?  What proportion of the party would not support him?  Could it split as a result?  And...would he not have to resign if he lost the poll?

• What happens Mr Cameron wins the election, puts his renegotiation plan to other EU countries, is told by France and Germany to bog off...and then campaigns in a referendum to stay in?  Again, what proportion of the party would not support him and would it split as a result?  (And the resignation question still applies.)

• What happens if Mr Cameron wins the election, puts his renegotiation plan to other EU countries, succeeds in gaining the terms he wants - and then promptly loses the referendum, perhaps because people simply vote to "kick the Government", regardless of the EU issue?  Would he not (again) have to resign?

Whatever happens, one thing is certain.  Politicians like to think they command events.  Sometimes they do.  But they don't in in this case.  It is the Eurozone crisis and the continent's response that will drive circumstances, not Mr Cameron or Mr Miliband or Mr Osborne.  The coachmen are not in control of the horses.

Enjoy the ride.