27 July 2015

Will George Osborne’s deal with the EU amount to much?


Several months ago, in the immediate aftermath of the UK general election, the word was that while David Cameron’s closest aides in Number 10 wanted a quick referendum on British membership of the EU, the dominant Chancellor took a longer view. George Osborne thought, it was whispered, that in going long there would be the chance of the talks producing a substantial deal rather than a cosmetic stitch-up.

Those who want a quick vote think it will exploit the Tory honeymoon. Labour is in an almighty mess and the economy under Osborne is still strong, although so much coverage of British domestic politics at the moment seems to be based on the quixotic idea that the economy will continue to charge ahead indefinitely. The Labour conversation about the leadership in 2006 and early 2007 took place with much the same view fixed as the consensus, what with boom and bust having been ended. Then look what happened shortly after that. Indeed, the first signs of the impending explosion were already there in 2006 when US housing prices peaked and in February 2007 when easy credit started to get crunched. Still, Gordon Brown sailed to the leadership that summer with the economy seemingly his strongest card.

Anyway, I digress. Suddenly, according to reports in The Times and the Financial Times, Osborne is up for a quick deal with the EU by December (it’ll all be over by Christmas) leading to a referendum in the first half of 2016. The Treasury is emphasising in response that the law will state that a referendum has to happen by 2017, but an early deal and referendum was always a possibility.

The Chancellor, as Cameron’s chief EU negotiator is in Paris today and preparing to tour European capitals. After the Greek shambles, still on-going on the basis of a joke of a deal, the EU Establishment does not need a British exit and there may be flexibility on the terms offered.

What Osborne also must know is that he has the potential Out campaign in a bind, for now. Moderate “outers” understand that loudly dismissing the negotiations while they are happening would be a mistake, because it would allow the government to say, when the deal is unveiled, that the critics never gave pragmatic compromise a chance. Most voters, the vast majority, are not paying any attention to this subject and when they do tune in nearer the time they won’t be much impressed by shouty Eurosceptic obsessives claiming their insights about the social chapter or management of the Eurozone have been vindicated, which is why Eurosceptics are, on the whole, sensibly keeping quiet. It does give the government a great deal of presentational leeway, however.

Yet, the stark truth remains. For all the talk of early deals and shuttle diplomacy, there is a hole at the heart of the government’s efforts. They are not, unless there is a secret unit in the Treasury or FCO redesigning the EU (highly unlikely), asking for very much at all.

The Times today talks of a “speedy negotiation on the four target areas: British sovereignty, fairness for non-eurozone members, competitiveness and immigration.”

Does that sound like the basis for a meaningful recrafting of Britain’s relationship with the EU? One wants to keep an open mind, although it is hard to see how a deal on that basis will amount to much.

Take it point by point. In December, the government can produce a form of words emphasising British sovereignty, but the treaties make it clear that in recent decades the UK has given up sovereignty to the EU. I don’t mean to be contentious here. It just has, for reasons of pragmatism, and machine-politics, and the UK parliament is subservient to EU institutions.

Fairness for non-eurozone members sounds quite easy too. You just produce a series of protocols about how the Eurozone will operate and call them fairness protocols.

Competitiveness? A deal on bits of the old social chapter, on employment, and a guarantee that the European Commission will produce a lot less regulation, which is the case already. The recently-installed more pro-market Commission is promising only a third of the number of measures produced by the old bunch. The commissioners are under orders to do less, and to do it better.

Immigration? Free movement seems to be non-negotiable, which is quite mad when you think about the context, of the EU’s wide-open southern border and the growing refugee crisis. Still, the EU’s leaders seem determined to stick with it, and the UK government looks as though it will be happy with some restrictions on benefits for EU migrants (which could be introduced now if the government was really up for it). The benefits crackdown also ignores the reality that the overwhelming majority of migrants come here to work hard, not to be on benefits.

So that, barring a piece of Osborne negotiating genius, is the deal. And looking at the polls right now, it could be enough to win it comfortably for Yes.

The Tory leadership’s calculation that this will be okay looks to be based on the following. Having just won an election convincingly, the Cameron/Osborne operation is in its pomp and their long-held view that power politics and statecraft trump all is vindicated. Helpfully for them, London was full of former Eurosceptics earlier this summer suddenly saying that it must be an “in” vote because, despite years of moaning about Brussels, now it comes to a vote it has to be for “in” because, because, because…

The gap and the trap this leaves for the Out campaign is obvious in an age when some voters dislike elites and their stitch-ups. The Better Off Out crowd can say the renegotiation doesn’t amount to much, or even that it is a betrayal. The risk there is that they will sound like a rabble of Corbynite left-wingers (newly converted to Out by the Eurozone’s treatment of Greece) finding common cause with Conservative sceptics and UKIP, as the well-funded sensible core of the campaign tries to focus attention on their upbeat claims about what life outside the EU could be like.

There remains a problem for the confident “In” crowd though. The Out campaign will seek to present the status quo as risky. With hardly any powers repatriated, even after years of fuss and endless promises, staying in will be presented by opponents as committing the UK to the integrationist EU project in perpetuity.

The deal will also come under intense media scrutiny; don’t believe the Ukippers saying the media will be supine. Interviewers and the Westminster lobby will, you can bet on it, be very robust partly because the idea of the Tory leadership having everything their own way will have become extremely boring by the time of the referendum, whether that is next year or in 2017. This is to say nothing of the tricky choice facing certain Eurosceptic cabinet ministers at that point, and the warfare in high definition 3D that will be raging in the Tory parliamentary party once the referendum is live.

In essence, to further his leadership ambitions Osborne will have to present whatever the deal is as a magnificent achievement and a marvellous vindication of his efforts. Those claims – about fairness protocols, and freedom of movement, and stuff that is happening already in the Commission being dressed up as a concession to the UK – will be tested, a lot, by Tory MPs, the Out campaign and the media.

Iain Martin is Editor of CapX