When Ed Balls lists the greatest accomplishments of his career, he does so with a wonderful lack of modesty. He may have been a mere Treasury adviser when Labour came to power, but even then he was — we now learn — pulling the strings of Tony Blair’s government. Bank of England independence was his idea. Ditto Labour’s decision to stick to the Tories’ eye-wateringly tight spending plans for the first few years of its rule. But Balls’s proudest boast, and one repeated with striking regularity, is that he stopped Britain joining the euro.
Not so long ago, the shadow chancellor would have kept this as quiet as his friendship with Damian McBride. When Balls drew up his ‘five tests’ for joining the euro, he was subverting the will of a staunchly pro-European Labour party. But British politics has since changed. No one, not even Nick Clegg, admits to being in favour of the euro. Public opinion is shifting, too: only a third of the country regards Britain’s EU membership as a good idea. The old left-right divide over Europe, which governed British politics for two decades, has disintegrated.
None the less, as Balls well knows, Europe remains a painful subject for the coalition. It leaves the Conservative leadership flitting awkwardly between its own Eurosceptic MPs and a pro-European alliance of civil servants and Liberal Democrats. Cameron and George Osborne have spoken vaguely about renegotiating’ Britain’s EU membership. But civil servants simply ignore the idea.
Labour can sense the government’s weakness here. Last month, when the phone-hacking scandal was at its peak, Chris Leslie led other Labour MPs in opposition to the raising of Britain’s exposure to European bank defaults. Alistair Darling and Gordon Brown had been strong advocates of strengthening the IMF guarantees, so this represented a significant U-turn. As rebel Conservatives joined in, the government’s majority was reduced to 28 — its smallest on any vote so far.
More difficulties are to come. The new intake of Tory MPs are strikingly Eurosceptic. Many believe that they are not obliged to endorse coalition cop-outs over Europe. One tells me that he regards voting against the coalition as ‘an assertion of authority, not rebellion’. Some Tory MPs believe that the coalition is bound to collapse anyway, so they may as well impress their voters. Remarkably few backbenchers are anxious to impress the Prime Minister.
Both Labour and Tory MPs say in private — few dare discuss the subject in public — that the big divide over Europe is not between parties, but between those in government and those outside it. ‘Ed Balls and William Hague could easily work together,’ one Labour MP tells me. But whereas Hague is constrained by the mandarins at the Foreign Office — and the need to keep the Lib Dems sweet — the shadow chancellor enjoys the freedom of opposition. And an appetite for political hellraising.
Ed Miliband has shown no sign of opposing Labour’s growing anti-European faction. Indeed, the formation of an official Labour Eurosceptic group of MPs is being planned for October. They intend to focus their criticism on the government’s apparent inability to negotiate with Brussels, and Cameron’s habit of coming back with a raw deal. A more robust European policy, says one Labour MP, ‘was meant to be one thing to look forward to from a Tory government’. Most Tory backbenchers are just as disillsioned.
So what’s next? Various theories are floating around Westminster. An MP close to the shadow Treasury team suggests that if there are to be more bailouts, Balls could force a vote on the specifics. ‘We want Europe to succeed, and don’t mind contributing,’ he says. ‘But if we’re going to vote for more bailouts, we want to be getting something out [of it]. We’d be pushing for any British role to come with conditions.’
Even pro-euro Tories are taken aback by George Osborne’s claim, made in an article for the Daily Telegraph this week, that the eurozone needs greater fiscal union — as long as Britain takes no part in it. Many of them agree with Douglas Carswell, perhaps the most outspoken of the new Tory Eurosceptics, when he wrote that it is not in Britain’s national interest ‘to see our neighbours and trade partners ruined by grand monetary plans’.
A particular flash point could come in October, when the People’s Pledge, a campaign group that wants to force an in-or-out referendum on the EU, hosts a rally. Several Labour and Conservative MPs are expected to attend, including some close to the government. David Cameron will be looking on with concern. He knows that nothing makes his party more mutinous than Europe. One Tory Cabinet minister even admits to voting Ukip at the last European elections. If Cameron cannot convince his Cabinet of the merits of the Conservatives’ European policy, how will he convince voters, for whom Europe is an increasingly important issue?
The truth is that neither party has done much thinking on the Euro since Maastricht. The same is not true for the British public. This is no longer a debate about abstract issues of sovereignty. Rather, Euroscepticism is becoming an all-party force, united in disgust at Europe’s inefficiency, profligacy and anti-democratic elitism. Cameron and Osborne appear to have no better strategy to deal with their MPs than soothing words. They need to catch up fast, or else events will overtake them.
This article first appeared in the print edition of The Spectator magazine, dated August 13, 2011Tags: Daniel Knowles, Politics