EU – Page 2 – thinking liberal

Why you should vote Liberal Democrat on 22 May

Britain, along with the rest of the EU, faces a very interesting set of elections this week, for the European Parliament. Our polling day is Thursday 22 May, when there are also local elections in many parts of the country, including London, where I live. I am not an impartial observer of these elections, but I do try to express my views dispassionately, and set aside the pure propaganda. Here is what I think of the various contenders.

Let’s clear the decks a bit. I am thinking mainly about England; my knowledge of the politics of other parts of the UK is better than that of most English people, but that is a low bar indeed. In Northern Ireland I have a strong inclination towards the Alliance Party, because of its non-sectarian ethos. I dislike the Scottish Nationalist Party (SNP) mainly because I am a unionist. But I will say for its politicians that they put Scottish politics above Westminster politics; SNP politicians do not aspire to a place in the British cabinet. Still, this is less relevant to the European Parliament than elsewhere. I have rather more sympathy with Welsh Plaid Cymru, who tend to set out a clear social democratic, reformist agenda. But Welsh politics is messy, and I don’t feel confident talking about it.

And neither will I talk about the local elections. These should be determined by local issue and the local politicians’ records – and not the subject of a sweeping blog post like this one.

In England there are five contenders for your vote: the Conservatives, Labour, Ukip, the Greens and the Liberal Democrats. Voting for any other party is a wasted vote, even under our proportional system – since there is no system of transferable votes outside Northern Ireland. There are many other parties contesting these elections, but they simply don’t have enough traction to get up to the level needed win a seat. This is to be welcomed in the case of the BNP, who did manage to win a couple of seats last time, in 2009.

The party everybody is talking about is Ukip. The main reason offered by people for voting for them is that they are political outsiders, and that supporting them will give Britain’s established political elite a well deserved black eye. This is about the only good reason for voting for the party. They are chaotic and ill-disciplined, and they don’t take the work of the European Parliament seriously, and so their presence will damages the national interest. Inasmuch as you can detect clear views, they tend to be illiberal. If you are a Eurosceptic, there are other parties you can vote for who will do a better job of representing you and the country in this forum, which has significant political power, whether or not you accept that is a good thing.

But do our political elite deserve such a kicking? Many of the voters I have met on the streets think so; they feel let down. This is not just our newspapers stoking things up, with the rest of our media in tow. Politics has become too professional, and not enough politicians genuinely engage with voters. Focus groups and polling might be quite useful for informing politicians about what people are thinking, but they don’t help people feel involved. But will the shock of voters defecting to Ukip, or not voting at all, make them change their behaviour? There is little sign of this. I am not sure the problem is entirely soluble in a modern, developed society. But to make things better we need political reforms, not protests. These reforms need to make politicians more responsive to voters. This means changing our electoral system, and it means devolving more power to local levels where it is much easier to involve people in decisions.

The trouble is that Ukip stands for a sort of conservatism. They want political reforms, but focusing on the European level, not at the national level, where they are most needed. This sort of conservatism tends to reject useful reforms, as we saw in the debate on the Alternative Vote system (which would have been a small step in the right direction), and the soft spot so many people seem to have for our appointed House of Lords. It’s not the right kind of kicking, and it is the wrong election to do the kicking at.

Most Eurosceptics would be better served by the Conservative Party. The Conservatives have a clear view on Europe: renegotiation and a referendum. This is surely the most sensible way forward if you believe that being part if the EU is bad for the country. The European Parliament cannot deliver on this agenda – but Conservative MEPs will be taken much more seriously in Brussels than Ukip ones, and will thus do a better job of representing the country – though they would have had much more influence if they had not left the parliament’s Christian Democrat grouping.

But is a referendum right for the country? Like many supporters of the European project I dither on this. I don’t think it is a good idea for the UK to leave the EU. This is mainly because emotionally I feel a strong European identity (maybe because I have lived a short while outside Europe). But more practically, our obligations within the Union are forced on us by our economic circumstances, and leaving it would make little difference. It would be a colossal waste of political effort that should be devoted to other issues. Meanwhile the uncertainty it would create, as so many things of commercial importance are renegotiated, would blight the country exactly where it can least afford it. Many of the same arguments apply to just having a referendum on the issue – never mind actually leaving. The main argument for a referendum is that it would lance the boil and let the country move forward. I would sooner wait until the EU is forced to undertake more significant structural reform that anything the UK can force on its own.

And so to the Labour Party. Their campaign for the European Parliament is focused on the “cost of living crisis”. Regardless of the merits of this, it is exactly the sort of irrelevant focus-group based politics that has given politicians such a bad name. Their election literature mentions practically nothing about Europe or the European Parliament. This kind of cynical campaigning should be rejected. Politicians should be courageous; currently Labour only want to play safe. I can respect David Cameron for his referendum strategy on Europe, which required quite a bit of courage. Labour are running from the fight.

And the Greens? They deserve respect: their literature (at least here in London) at least talks about what they would do in the European Parliament. They don’t talk about Britain in Europe, but about the sort of Europe they want. That is what these elections should be about. I am just less than convinced about their vision. For me it is too anti-business. Good intent is no substitute for knowhow. We should be pushing Europe towards an environmentally sustainable future – but we have to take the public with us. We have to challenge big business vested interests – but also allow big business to keep people in jobs, and provide that element of economic stability people crave. I don’t think the Greens have a clear idea of how to get that balance right.

Which leaves the Liberal Democrats. The Lib Dems are the most Europhile of the parties (though quite a few Europhiles inhabit the Labour Party and the Greens). This has one particular advantage: it means that they part in the European Parliament’s processes with more enthusiasm, and so are much more influential than they would be otherwise. Liberal Democrats have held some very influential positions (such as Sharon Bowles’s chairing of the Economic & Monetary Affairs Committee). In this work they do a good job of standing up for British interests – and can actually talk about their track record in the Parliament with pride. They have also shown a lot more courage in standing up for a pro EU position – unlike the Labour Party – and unlike the party has done in previous elections to the European Parliament. You may not think all of their pro EU arguments are convincing (though the same can be said of most of the anti EU arguments), but they have done the campaign a service by talking about it.

Right through the country’s history Britain, and England before it, has never been sure about the role it should take in Europe. There have been times when the country has successfully pursued a global agenda while retaining minimal involvement in European affairs, such as in the mid to later 18th and 19th Centuries. At other times the country has been a fully fledged player, such as Waterloo in 1815 and the First and Second World Wars in the 20th Century. Right now the country’s dependence on trade leaves it no option but to be heavily involved in its European connections, whether or not the country stays in the EU. I believe that means that the country’s leaders should try to shape the EU from within. Others feel that by leaving the EU, it will be easier for the country to find the best path in the world. If you share my view, then the Liberal Democrats are the party for you. If you don’t, then you might still consider voting for the party as highly effective operators in the parliament. Otherwise think of voting Conservative or Green. Don’t vote for Labour or Ukip, whose campaigns are taking British politics in entirely opposite but wrong directions.

Brexit: an own goal for the Eurosceptics

It must have seemed like a good idea at the time. A while back a right-wing think tank, the Institute for Economic Affairs (IEA), launched a EUR 100,000 prize for a blueprint for Britain’s exit from the EU, the “Brexit”. The winner was announced last week, to not very much fanfare. You can read it here: Brexit Entry 170_final_bio_web. It is not surprising that our mainly Eurosceptic media have given it a low profile. It exposes flaws that go deep into heart of the Eurosceptic case. Better to stick with Nigel Farage’s meaningless soundbites. No doubt the Europhiles ignored it as its thesis is still Eurosceptic. That is a pity. This piece of work deserves to be taken seriously by both sides of the debate.

First, though: credit where it is due. This piece of work is a breath of fresh air compared to most of what comes out of both sides of the debate. It is calm, factual and objectively reasoned. It reflects well both on its author, 30-year old diplomat Iain Mansfield and the IEA. Bar one or two articles in The Economist, it is about the best reasoned thing I have read on Britain’s possible exit from the EU.

The essay answers the question of what would happen if Britain voted to leave the EU. It considers the various negotiations that would need to be made, and what these should aim to achieve. It has a stab at assessing what the economic consequences would be. Along the way it explains a lot of the facts that impinge on this (such as what is the difference between the EEA and EFTA?). This is a welcome change from the airy hopes and assertions usually made by Eurosceptics – and the equally airy scorn poured on them by Europhiles.

Its central idea is quite a sound one. Britain would not bring up the drawbridge and retreat into “Little England”, as no doubt some older Ukip supporters would like. The UK would establish itself as an open nation, promoting free trade. This reflects the economic liberalism of most modern Conservatives. They feel that membership of the EU gets in the way of the country promoting a economically liberal policy agenda.

There is one big gap in this work as a review of Britain’s options. There is no sense of industrial strategy. British business would flourish in a less regulated environment; we would trade more with emerging economies. That’s about it. Where are Britain’s comparative advantages? Which industrial sectors would we rely on – and how would these be promoted after Brexit? And the gorilla in the room: what happens to international wholesale financial services (aka the City) in the brave new world? It is easy to see both positives and negatives for the City – but how would these balance out? If there is one thing that makes other European nations exercised about Britain, it is the financial industry. Surely they wouldn’t hesitate to use a Brexit to make mischief?

There is also a quibble. He says that Britain should gain a net £10bn per annum in net contributions – though not straightaway. He says some of this will have to be spent on building capabilities that we have delegated to Brussels, such as trade negotiation and antitrust, but mostly it would be a gain. And yet he freely suggests the need for agricultural subsidies, and a host of inducements to entice in foreign direct investment (FDI). That £10bn is unlikely to last very long.

But that’s a detail. Three big problems stand out from this study. Has the British public signed up to economic liberalism and deregulation? Is the Brexit strategy trying to have its cake and eat it? And is it worth all that effort?

There is common belief on the right that Britons are a nation of freewheelers, and that the inveterate regulators in most other European countries are anathema. We are more like the Americans. Leaving aside whether Americans really are such freewheelers (you need a licence to be a hairdresser in many states), this is not well founded. Britons love to whinge about excessive regulation, to the extent that “Health & Safety” has negative connotations, but attempts at deregulation usually fail. Mr Mansfield wants a “Great Repeal Bill” to roll back and replace a host of product and labour regulations. That promises to be the mother of all political battles, and its outcome is bound to disappoint. Britons have as much affinity with Scandinavia as America – and you can’t move for regulations there, not least in Norway, which is not even in the EU. Indeed the sort of new Britain that many Tory Eurosceptics seek is a kind of right wing dystopia so far as most Britons are concerned.

More serious is the strategy for European trade that lies behind the Eurosceptic economic case. For all his thoughtful detail and realistic attitudes, this looks like a strategic flaw in Mr Mansfield’s strategy. The idea is that Britain gets free access to most European markets (he rightly suggests this would be unrealistic for agriculture, though); but that our industry will be more competitive because it can avoid large areas of regulation, especially for labour. And he takes this a step further, by suggesting that, with the help of some extra incentives like low tax rates, the country can retain its popularity as one of the top European countries for FDI – so that these incomers can export to the EU. This is known as having your cake and eating it. This strategy requires the cooperation of the county’s EU trading partners, who have a name for it: social dumping. And the fact that Britain imports more from Europe than it exports to it does not, in fact, give the country a strong negotiating position, as many Eurosceptics suggest. To his credit Mr Mansfield does not mention this last argument, and describes the British negotiating position as weak.

Which leads to the next problem. When you get into the detail of what has to be negotiated, Britain will end up giving concession after concession. Mr Mansfield suggests that half or even two thirds of the aquis communitaire (the body of EU laws and regulations) would have to be retained by Britain. The scope is massive. The overwhelming impression I get from reading this essay is the sheer size of what would have to be dealt with in a series of extremely tricky negotiations. All for what? Mr Mansfield estimates a range of impacts on the economy from -2.6% to +1.1%, with +0.1% as “most likely”. He observes that the case is more political than economic.

In only one area might the general public, as opposed to right-wing politicians, think that this might be worth it: ending the free movement of people, and especially labour. We would still need quite a free flow, but it would be easier to manage – and it would be easy to establish inferior rights for European immigrants. I suspect that the whole case for or against the EU will turn on this – and Europhiles badly need to sharpen up on the subject.

At the end Mr Mansfield refers to the examples of Canada and New Zealand as being successful countries in spite of being separate from nearby behemoths (the USA and Australia respectively). Interestingly another study on the benefits of EU membership, reviewed in this week’s Economist, uses a comparison with New Zealand to suggest that British incomes are 25% higher for having joined the EU in 1973. New Zealand’s economic record, in spite of (because of?) being a bit of test bed for economic liberalism, has been pretty underwhelming. It has recently being doing better courtesy of massive exports of agricultural products to China. Well New Zealand is a small country far away from anywhere – so comparing it with the UK is a stretch. But at least it has a decent export engine based on its natural resources (as does Canada with its mineral wealth). Britain’s oil is fading (and mostly Scottish anyway); it has been in agricultural deficit for a century; it is not an option to despoil swathes of countryside to dig out minerals for the Chinese market. We have the City, and lots of management consultants. Is this enough to build big export industry with the developing world?

In recent article, Vagueness is a danger for eurosceptic demagogues FT columnist Janan Ganesh pointed out that the Eurosceptic case tends to fall apart when Euroscpetics try to spell out exactly what they think exit it all means. Mr Mansfield’s interesting and refreshing essay cannot hide this truth.

Why Labour are losing the election in 2015

According to press chatter, there is mounting worry amongst those that surround Ed Miliband, the leader of Britain’s Labour Party. I don’t know anybody in this elite circle, and I can’t offer an opinion on whether this is true. What I can say is that it should be. After ducking hard choices when the going was good, he is now in real trouble.

The immediate cause of the Labour wobble, if that is what it was, was the poll bounce for the Conservatives after the recent Budget by the Chancellor, George Osborne. The previously secure Labour lead simply vanished. This poll bounce disappeared as quickly as it came. Clever charts showing that it was part of a longer-term trend look premature. But it did show that Labour support is not solid, and that the Tories are not quite as terminally unpopular as many suggested.

But what really convinces me that Labour are in deep trouble is this exclusive piece in yesterday’s Independent, highlighting an article Mr Miliband had written for the paper. Here’s the first paragraph:

Ed Miliband has promised to rescue Britain’s struggling middle classes by boosting their living standards as he warns that the “cost-of-living crisis” will last for at least another five years.

This seems to be part of a bid by Mr Miliband to rebuild his electoral standing; today he is launching a policy about devolving more power to “super-City” regions, building on a policy developed by the Liberal Democrat leader Nick Clegg, as he will not say.

This political drive builds on two themes that Mr Miliband has been developing. The first is “the squeezed middle” – a deliberately vague reference to people who feel they are neither favoured by government handouts, nor part of the rich elite. It is interesting that this seems to have migrated to “the struggling middle classes”, when it might just as easily refer to working classes (if you get beyond the bureaucrats’ tendency to use the term “working class” to refer to people who are not working, and entitled to state support, as an alternative to the word “poor”). The second idea is “the cost of living crisis”, referring to the fact that for most people incomes have not increased as fast as prices over the course of the last government.

No doubt Labour’s polling shows that these ideas cover a large swathe of generally unhappy people, who might therefore be sceptical of the government’s record. The problem is how to appeal to them. Almost by definition, these people are out of the scope of state benefits. In fact they tend to resent the size of the state benefits bill, apart from the old age pension, whose cost they tend to underestimate. They are not employees of the state, a separate and distinct constituency, even if they share some of the same problems). So how to address their standard of living? There are two ways: tax cuts and a stronger private sector economy. On both counts Labour’s credibility is behind that of the Coalition.

The best sort of tax cut to reach the squeezed middle is a cut to personal allowances, i.e. the point at which people start to pay tax (including its National Insurance equivalent, something all parties seem happy to ignore). But the Coalition has already been increasing this quite aggressively, mainly at the expense of higher rate tax payers, some of whom are now claiming to be part of the squeezed middle too. Worse, it is one of the few policies that is closely identified by the public with the Liberal Democrat part of the coalition, which Labour is extremely keen to denigrate – they have picked up a lot of ex Lib Dem voters. They have floated the idea of a 10% tax band, which is just a less efficient way of delivering the same policy – and has uncomfortable echoes with one of the last Labour government’s policy mistakes.

There is an even bigger problem with taxes. Labour has to convince voters that it will not put taxes up to pay for an expanded state. That means signing up to a series of things, like a cap on benefits expenditure, that will be unpopular with core Labour voters, and not even particularly sensible from the point of view of economic management.

But tax cuts are a fairly minor palliative. What would really cheer voters up is the prospect of incomes rising in the private sector. The trouble is that Labour has done nothing to dispel its reputation for being anti-business. Quite the opposite. Mr Miliband’s view is that there are good businesses (“producers”) and bad ones (“predators”). Wages are being squeezed by the predators to benefit their top managers and shareholders. So his anti-business policies are directed at these predators (banks and energy companies to the fore), while helping the producers. This argument is not entirely without merit, but it is a tough sell. And in practice it is pretty much impossible to create policies that discriminate successfully between the two classes of business, and all those that inhabit the grey zones in between. The result is that Labour’s policies designed to address this problem, such as the devolution to the cities, don’t look as if they will deliver much of a boost to wages in the short term – even if they are perfectly sensible. And sensible policies are liable to get matched or pinched by the coalition parties anyway.

The Conservative counterattack to Labour will point to the fragility of the current economic recovery, and say “Don’t put all this at risk”. Of course one thing that could put the fragile recovery at risk is the Conservative plan for a referendum on the EU. But does Labour want to go out with all guns blazing on that issue? Perhaps I underestimate Mr Miliband, and that is his plan. But so far he is happy for Mr Clegg to take the lead on the issue. In fact you could not inaccurately describe Labour’s emerging strategy as “I agree with Nick”. A liberal, centre-ground stance that wants more devolution from Westminster, but with a strong attachment to the EU.

So Labour is embarking on an impossible task to convince the electorate that it can out-do the coalition parties at their own policies. This won’t work. But what it will do is to de-motivate their core constituencies of public sector workers and the squeezed bottom, as I might call the voters suffering from benefits cuts.

The trouble is that Labour hoped to get the best of both worlds after Mr Miliband was elected. That they could adopt a “Blair-lite” strategy that allowed an appeal to the centre ground, while at the same time harnessing the wave of anger from their core voters at the government’s austerity policies, which, incidentally, allowed them to harvest a lot of Lib Dem voters. But Blair-lite lacked credibility as soon as the economy started to revive. There was a choice to be made for either Blair II, an unashamed dash for the middle ground, including an apology for the record of the last government’s economic policies (though that would have been too much for Mr Blair himself). Or they could have gone for unashamed social democracy, making a case for higher taxes, a bigger state, and less aggression on cutting the deficit (isn’t going for a balanced budget just willy-waving after all?). The first of these two choices might well have destroyed the party, given the depth of anger over “The Cuts” – but the second choice was never properly debated or confronted. It would have been perfectly respectable and courageous – even if expanding the state back to the size it was in 2008, or even 2010, would have taken a very long time.

The Conservative General Election campaign has not got started yet. They will allow Ukip their moment of glory in this year’s Euro elections, then quietly mug their voters by stoking up fears of Labour. Labour’s credibility will fall apart, and they will have increasing trouble fending off Tory attacks and keeping their core supporters loyal.

If I was advising Ed Miliband, I would be worried.

Us, them and Europe

Britain’s membership of the European Union used to command almost universal assent from the country’s intellectuals. Just how far this has changed was made clear to me by a recent BBC Point of View talk by the philosopher Roger Scruton. He concluded a thoughtful series of talks on the nature of democracy with what amounted to a diatribe against the European Union as an “unaccountable empire”. Mr Scruton is a serious man, and his criticism of the EU needs to taken seriously by supporters of Britain’s membership like me. .

The essence of Mr Scruton’s talks is that democracy is based on a series of institutions that allow opposition and argument. He criticises Egypt’s Muslim Brotherhood for claiming that its attempted imposition of a theocratic regime was democratic, when they were undermining the very institutions on which any democracy has to be based. Mr Scruton goes on to say that these institutions can only be sustained where a country has a sense of “us”, of identity that tolerates opposition with a sense of it being all in the family. But “there is no first person plural of which the European institutions are the expression”. He goes on to suggest that this because the EU is based on an international treaty that supersedes elected legislatures, and becomes incapable of being modified. He uses the EU’s free movement of peoples as his prime example, as many Britons are unhappy with so many people from other EU countries taking up residence here. He goes on to say that “democracies need boundaries, and boundaries need the nation state”, painting a picture of nation states coming together from a bottom up sense of togetherness and neighbourliness, shaped by shared language and culture – which the EU lacks.

I have two immediate reactions to this. Firstly I am very uncomfortable with the suggestion that our feeing of “us” and “them” are simply matters of historical and geographical fact that we should adapt to – and the all Britons are “us”, while Brussels bureaucrats are “them”. To me this has a rather scary overtone of the 19th Century idealisation of the nation state, based on language and culture. This movement led to the unification of Germany and Italy, and myriad calls for self-determination which led to the breakup of the Austro-Hungarian and Ottoman Empires. It helped usher in, from 1870 to 1945, 75 of the most disastrous years of war, conflict, forced migration and genocide in our continent’s history. Unscrupulous politicians played up on peoples’ sense of “us” against “them”, and tried to impose this on the continent’s tangled patchwork of languages, cultures and nationalities.

And if we think that Britain is exempt from all these continental complexities, I wonder if a Northern Irish person of Catholic heritage really thinks that government from Westminster is by “us” rather than “them”. And Scotland’s most successful political movement is based on the idea that Westminster is not “us”, and poses a threat to the country’s coherence. The first person plural is not a matter of received fact, but has to be built patiently out of liberal principle. And in the modern, highly interconnected world we must be inclusive. It is not as if Britain’s history is that of being an isolated island nation: we have been a hub of European and world politics; the country used by a the pinnacle of an empire that covered a quarter of the world’s surface, and for two millennia it been part of a highly interconnected European history. Britain is a trading nation and an international hub; we have to accept the responsibilities that go along with that or we will not appreciate its benefits.

As it happens, since being a teenager I have felt a strong affinity with the European project, and have ever since felt that the European institutions have been a political expression of my first person plural. And neither is it true that the European treaties have been fixed and unchanging; they have been subject to democratic pressures from below.

My second reflection is that the European Union is something of a lightning conductor of political discontent – and that removing it will not actually remove the discontent. When I look at technically fully independent countries like Australia, I don’t see places at are any more at peace with themselves and the world around them than we are. True, Australia has recently benefited from a good run of economic prosperity – but at the cost of big mining corporations running riot across the countryside (for people worried about wind turbines, just look at the open-cast mines marching across the Hunter Valley in New South Wales),and who have such political clout that they are able to overturn tax proposals that they don’t like. And the politics of immigration are just as toxic. Australia (and I could also use those other Anglo-Saxon bastions of New Zealand or Canada) finds itself at the mercy of an interconnected world, and it is by no means clear that they are better off outside an international federation like the EU. Britain’s problems would not go away, or become any more tractable, if it left the EU.

But having got all that off my chest, I have to admit that Mr Scruton has put his finger on a real problem, which is that EU institutions have lost popularity, and often seem beyond political accountability. His use of the free movement of people as an example is very telling. This idea lies at the beating heart of the European Union, but it creates a lot of tension. And unlike many supposed EU generated problems, like over-regulation, it’s for real. In Lincolnshire, where Mr Scruton was born and where support for the anti-EU Ukip is high, there have been real impacts from the influx of east European migrants in search of work. And yet freedom of movement has had real economic and personal benefits. And it is not just in Britain that anti-EU feeling, in large part directed at free migration, has been building up. This is all hobbling areas like energy policy where EU level action is increasingly warranted.

In the long run the answer is for Europe to develop a stronger sense of “us”. This may already be better developed than Mr Scruton allows, but it remains very patchy. I believe that there is enough of a sense of common values and history to provide a basis for this. One of the best ways for a Briton to feel European is to travel to a country like U.S. or, for slightly different reasons, Australia. But it needs to be promoted by liberal politicians, and is the work of generations.

A referendum on EU membership, the policy of our Prime Minister David Cameron, remains an enticing idea. The consequences of a “no” vote would be disastrous, but the pro-EU forces need to be rallied, and the institution’s legitimacy must be reaffirmed. I am also coming round to the idea of another of Mr Cameron’s ideas: a British Bill of Rights. This would mainly give a British label to core European principles, but it could also set clear British constitutional limits to European power, much as Germany’s Basic Law does.

But the bigger truth is that we must move on from the 19th century idea of an all-powerful sovereign nation state. We have to develop the legitimacy of multinational bodies like the EU; we also need to devolve power to more localised levels, especially in bigger states like Britain. This requires fresh thinking on the institutions of democracy. Roger Scruton is right to remind us that democracy is about more than voting, and requires a sense of common identity, but in the end he is not helping us to adapt the world where humanity now finds itself.

Understanding the case for Britain leaving the EU

The British Eurosceptics are on the march again. Much of this is the usual stuff and nonsense, based on Ukip’s good electoral performance last week, though that has more to do with an anti-politics mood, and worries over immigration, than EU membership. But of the noise has a more substantial basis. Former Conservative Chancellor and Europhile Nigel Lawson joined the fray with an article in The Times, shamelessly promoted by the BBC, advocating Britan’s departure from the EU. I see today that another former Tory cabinet minister, Michael Portillo, has joined in, though I’m not sure if he was ever much in favour of the EU in its current form – though this polyglot is anything but a Little Englander. An increasing proportion of Britain’s intellectual establishment is being persuaded by the case against Britain’s membership. I am interested to understand this phenomenon, rather than simply dismiss it. While any popular referendum will be won or lost on the basis of fear and ignorance (as we learnt from the AV referendum episode in 2011), I think it is important to engage in a more considered debate.

But I do need to declare an interest. I am a visceral supporter of the European Union project, and have been since I was a teenager. I was too young to vote in the 1975 referendum, which took place on the day of my Physics practical for A-level, but I was in no doubt where I stood a that point. I’m not sure where this feeling came from: it wasn’t my parents. I was a big admirer of Ted Heath, the former Conservative Prime Minister, which may have helped. Though while I fell out of love with the grumpy and inflexible Mr Heath, my Europhilia remained undimmed… though I shared it with replacement political heroes, Roy Jenkins and Shirley Williams. For all that, I hope I am able to put my emotions to one side to try and understand the arguments.

On doing the basic Internet research for this post, however, I found one thing rather striking. The absence of decent publicly accessible information on Britain’s relationship, and especially trade. The more serious analysis tends to have been done by Eurosceptic think tanks like Civitas. This Factcheck article from last year rather illustrates the point. This may be one of the reasons that Eurosceptics are making headway in the intellectual argument: the Europhiles aren’t really engaging, and where they do it is often weak stuff.

I think the intellectual case for leaving the EU is based on two key propositions: there is a huge dead weight of EU regulation which is dragging British businesses down, to say nothing of budget contributions; and the impact on trade of leaving the EU would be marginal, and the short term economic costs small. There are further arguments around sovereignty and immigration: but these are more emotional. Lord Lawson did not make much of them, so far as I could tell (I haven’t read his article, which is behind a paywall, though I did listen his BBC radio interview). I sense that behind the intellectual arguments there is a frustration with Britain’s slow economic progress, and a hope that leaving the EU would energise the country, perhaps rather like Japan has been energised by their recent change in economic policy.

Let’s look at each of the main propositions. First is the dead weight. I think this breaks down into the following areas: product regulation; financial services regulation; labour market policies; environmental standards; and agriculture and fisheries policy. Product regulation (on cars, for example) is probably the smallest worry. As we are increasingly global in our tastes, and need to export to pay for our imports, this is just a fact of life. International standards makes sense; I read an article in The Economist a little while back suggesting that the whole world was moving towards EU standards, making Brussels the regulatory capital of the world. There are clear advantages to the country being part of the creation process; but outside the EU the country could no doubt apply them more flexibly. I don’t think this is what is winding the Eurosceptics up.

Lord Lawson made a big deal about EU regulation of financial services harming the City of London and the country’s exports of financial services. As Britain loses weight in the EU, this is becoming more of an issue. There is a balance here: inside the EU it will be easier to export services to other EU countries; but outside it may be easier to do business with non EU countries. It is possible that the balance has shifted towards the latter. Behind this there seems to be a rearguard action by the City to undermine the idea that the British economy should be “rebalanced” away from its dependence on financial services. It’s no surprise that Lord Lawson is part of this rearguard.

Environmental policy is another ideological battle masquerading as an argument over the EU. There is a clear case for regulating such a cross-border activity as pollution and carbon emissions at an international level. But EU environmental policy has gone seriously off the rails recently. The Germans are building coal-fired power stations; biomass energy is being ramped up without regard to its wider environmental impact; political fudge has undermined the EU’s carbon trading scheme to the point of making it nearly useless. A weak economy makes higher environmental standards harder to fight for.

It is probably labour market and agriculture and fisheries policies that wind up the Eurosceptics more than anything else. Even Europhiles despair over agriculture and fisheries, though it is inching towards something a bit more sensible. The Working Time Directive is a major irritation to many employers in both private and public sectors. But British labour laws remain amongst the freest in the EU.

In summary, the EU surely does impose costs on the British economy, even if the sceptics exaggerate them. What of the benefits, and the costs of leaving? These centre mainly around trade. There are no tariffs in the EU, and there is a series of rights and enforcement structures that make non-tariff barriers difficult to apply. This reduces costs to British consumers and increases opportunities for British exporters. Membership of the EU is known to be important to some industries, especially the motor industry, and helpful to inward investment. One of the few proper analytical studies I found on the Internet suggested that gains from trade within the EU had been significant. Britain has become highly integrated with the rest of the EU, and for the most part, according to these academics, this has not come through simply switching from other world markets.

But leaving the EU does not simply mean this comes to an end. The benefits flow in two directions, and the remaining EU countries simply wouldn’t cut the UK off if it left. Britain imports substantially more goods from other EU countries than it exports to them (accounting for about half Britain’s trade deficit in goods). The statistics for trade with the EU in services, where the country has a world surplus, aren’t in the regular statistical release, and I haven’t found a breakdown. But the EU market on services is notoriously less free. Eurosceptics argue that if the continuing EU want to try putting barriers in the way of the UK’s exports, the UK has plenty of scope for retaliation. It should be perfectly feasible to negotiate a free trade deal. And, indeed, this would take the relationship to something like the organisation that Britain joined back in 1973, and subjected to a referendum in 1975.

Two arguments can be made against this line of reasoning. First is that the relationship between Britain and the rest of the EU is asymmetric: the trade matters to Britain more than it does to other EU countries. That will make negotiation harder. But a more fundamental issue is the rationale for EU regulation in the first place. It is largely to prevent unfair competition through laxer labour or environmental standards. And yet this “unfair” competition is exactly what Eurosceptics have in mind as a source of growth after Britain leaves: the benefits of membership without the costs. It is hard to see that other EU countries, more sceptical about unfettered free trade than most Britons, will not impose costs. Such is the experience of the deals that Norway and Switzerland have been left with. Why would the European nations be more generous to the UK outside the EU than in it?

So much of the cost of leaving the EU is in fact unknowable. Eurosceptics are happy to make the gamble. Behind this, I think, lies a classic libertarian view of the economy. The less government regulation and tax, the better for the economy as a whole. Leaving the EU would allow the regulatory burden to be lifted, creative forces to be unleashed, and the country to storm forward. They are quite excited by the prospect, after years of grind and stagnation. Those further to the left regard this as fantasy. A society that is lightly taxed and regulated is only good for a small elite and will fail to build the infrastructure required for long term prosperity. Would you rather live in America or Denmark? It is these conflicting visions of the way our country should be run that lie behind the argument over Britain’s EU membership.

Mrs Thatcher: the lightning conductor

Oh dear! The death of Margaret Thatcher yesterday has unleashed a flood of comment about how she transformed this or that. Mainly it is praise from the right (it’s everywhere and I can barely bear too read them, so I’ll only link to this one from the FT’s Janan Ganesh which manages to be reasonably objective). But the left do not want to be deprived of an opportunity to vent their precious hatred – like this absurd article from the Independent‘s Owen Jones. What she symbolises seems to be more important that her actual achievements.

When I first studied history (I did History Part 2 at Cambridge, graduating in 1979 just as Mrs Thatcher took office) the Marxist view of history was quite prevalent. This saw history as a sort of clash of tectonic plates (I also studied Geology at Cambridge…) formed by social classes or interests (“the forces of history”), which downplayed the contribution of individuals. If one person had not led such a change, it was held, then somebody else would. This was closely linked to the idea of historical inevitability, used by left wingers to predict their inevitable victory, and so contributing to their tactical ineptitude. The Marxists greatly overplayed their hand, but the fashion seems to have gone too much the other way. We associate the process of historical change too much with individual achievements. And none more so than with Mrs Thatcher (as she is no longer alive, I do not feel the need to use her title: she was always Mrs Thatcher to me).

The period when Mrs Thatcher was Prime Minister of the UK, 1979 to 1990, was one of quite dramatic transformation in both this country and the world. I remember the 1970s all too well. The British corporate settlement was in a state of collapse. In common with many democracies the country had been governed through a sort consensus of trade union bosses, managerial types and civil servants. Unfortunately the management leg of this arrangement was very weak: business leaders were more interested in undercutting each other than showing solidarity in the face of common challenges. In this the system contrasted with Germany and Japan who have used the corporate model much more successfully; and unlike in France, the state element had an anti leadership culture. With management and the state weak, trade unions ran rampant. Edward Heath’s government of 1970-1974 at first tried to work with the consensus, but the unions were too greedy – and he lost power in 1974. Though the public mainly agreed with him on the unions, they saw his government as incompetent, leading to an indecisive election result that Labour’s Harold Wilson skilfully exploited. The world economy was reeling from a massive rise in oil prices, which the government tried to treat as if it was a cyclical rather than structural problem with loose fiscal and monetary policy (following principles espoused in our current environment by Paul Krugman et al). Labour wrestled with the impossibility of trade union economics. The turning point came in 1976, when Britain had to go to the IMF for a bailout. Wilson had bowed out, and the messy job of fighting back fell to Jim Callaghan and his Chancellor, Dennis Healey. But the unions fought back, and the notion arose that the country was ungovernable. Enter Mrs Thatcher.

I voted for Mrs Thatcher in 1979, or rather I voted for Sir George Young in Ealing Acton, in support of the Conservatives. I was growing out of my cold war inspired distrust of Labour, but hated the messy process of fudge and compromise that was Mr Callaghan’s way (symbolised by such outrages as the Dock Labour Bill, which thankfully never got into law). Mrs Thatcher’s economic policies were a real shock: sky high interest rates, causing industrial collapse across swathes of the country. But who else had an answer to the simultaneous inflation and unemployment in which the economy had been stuck? But the style, if not the substance, grated and when the SDP was formed out of the wreckage of the Labour Party, I joined it.

Mrs Thatcher’s government swept away much nonsense: trade union power, nationalised energy and telecoms businesses, City restrictive practices, and so on. These acts of destruction were necessary for the British economy to thrive. On the left the Thatcher government takes the blame for the destruction of swathes of British industry, and the communities they supported. The emotion gets very high in the case of coal mines. And yet there is no modern economy that has not seen destruction of such jobs on a similar scale. Walk into a German factory and you will see lots of production, but few workers. Industrial technology has wiped out a whole category of seemingly safe industrial skilled and semi-skilled jobs that were the bedrock of the working class. After Mrs Thatcher, globalisation has continued the same process, but the main destruction comes from technology, not the export of jobs. And, for all the destruction of these jobs, the extra wealth generated by productivity improvements has spread across the whole of society, even if it has favoured the rich proportionately more. This is one reason why our current recession is inflicting less genuine hardship that previous ones.

The process of modernising the British economy was necessary and beneficial. And also, surely, inevitable. Without Mrs Thatcher the changes would have happened more slowly, perhaps. But they would still have been painful, and yes, “divisive”, to use the common word attributed a lot to Mrs Thatcher. But she did take the process of confrontation to extremes. Did this create more social harm that was necessary? We can’t know, though the admittedly smaller and more cohesive country of Sweden managed a very similar transition rather more successfully, I feel. But Mrs Thatcher was a hero to many Swedes.

A more serious criticism of the Thatcher government is that it did little to create sustainable jobs to replace the ones destroyed. The country launched forward on a twenty-odd year credit binge fuelled by North Sea oil. Just how hollow this was is now becoming clear, as the flow of oil slows. A severe devaluation of the pound has not done much to correct a severe imbalance of trade. But it is a little unfair to entirely lay this at the door of Mrs Thatcher, though. The imprints of Labour’s Tony Blair and Gordon Brown are just as firmly on this failure. And it is no so easy to see what should have been done about it.

And on the world stage? Mrs Thatcher’s most conspicuous triumph was taking on Argentina in the Falklands war. This one was about heroes I think, rather than the forces of history. It helped bring down a nasty dictatorship, and secured Britain a stronger international standing – though I am less clear about what good that led to. To suggest that she and Ronald Reagan’s confrontational attitude to the Soviet Union had much to do with its eventual collapse is nonsense: it needed no outside help to do that. And when it fell Mrs Thatcher was flat footed, failing to understand the implications of what was happening. Her contemporaries Helmut Köhl and George Bush (senior) were much more on the ball. Her reservations about a united Germany may have been well founded, but she had no solution.

Still she deserves credit for one important international development, beyond toppling the Argentine generals. She was instrumental in the launch of the single European market in the EU. This project was making little headway as Eurocrats pushed forward a hopeless programme of bureaucratic harmonisation. Mrs Thatcher, with the Commissioner she appointed, Lord Cockfield, turned this around giving a presumption to free trade. It was a classic synthesis British freewheeling pragmatism and the more bureaucratic and formal French approach. She may have felt with hindsight that the Single European Act that enshrined it in UK law went too far, but her vision of Europe as an open market was genuine enough, and she deserves credit for persuading her European colleagues of the idea’s merits.

Mrs Thatcher was a hugely conspicuous character on the British and world stage, both through her sex and her personal style. It is only natural that we project so many positive and negative feelings onto such a person, as a sort of lightning conductor. But many of the changes she wrought were the inevitable march of modernisation; and many of her achievements were undermined by tactical and strategic errors. She did more good than harm. Faint praise. She would not have liked that, but then she would not have like me.

That speech: just a ripple on the surface of British politics?

Last week I commented on David Cameron’s speech on Britain and the EU, where he promised an in-out referendum, following a “renegotiation” if the Conservatives win the next General Election in 2015. For some days after I though this was a decisive moment in British politics, in which Mr Cameron seized the initiative, and the Labour leader, Ed Miliband, lost his chance to win the next election. A week on, the dust has settled and the news is dominated by other stories. Was is such a decisive moment, or a mere ripple, a failing prime minister making a promise he can’t deliver?

The weekend polls show no decisive shift, with the coalition parties trending up a tad, but Labour still comfortably ahead, following a trend already evident before the speech. One poll seemed to show a big advance by the Conservatives at the expense of UKIP – but on further examination it looks as if this has more to do with polling methodology than people changing their voting preferences. Mr Miliband’s calculation appears to be that the main issue for British politics is the economy, and so the best thing to do is to change the subject back to this issue. His line that the speech hurts the economy because it creates uncertainty, that old argument against any form of decisive leadership, seems to be carrying weight with the British public, according to a further poll published by The Independent – though this also showed Tory support rising. And in the ephemeral world of British political commentary that should be enough to say that this is just a small tactical victory for Mr Cameron, making his party less vulnerable to UKIP, and not much more. But I think two big things have changed, and a big problem has opened up.

Firstly, Mr Miliband has made a serious strategic error, even if its significance will not show up much before 2015. His strategy should be to focus the political debate onto a small number of subjects and overwhelm the opposition there. This is a strategy I have called “the same, only different” following a 20th Century advertising campaign for a product I have long forgotten. It was used by Tony Blair’s New Labour to devastating effect in 1997. Basically you shadow your opponent’s policies in almost every detail except for a small number carefully chosen issues, plus a big investment in mood music to make your party appear more caring and more competent. I remember the exasperation of Tories; whenever they came up with a new policy to try and get an edge on Labour, Labour promptly adopted it as their own. It prevented the other side from changing the agenda. This seems to have been what Mr Miliband is trying to do, albeit without actually committing to any policies just yet (again following Mr Blair’s example). He is not creating sharp policy differences with the government, and making the main focus of his attack the economy. He is trying to create the right mood music by painting the government as by turns gratuitously nasty, and shambolic and incompetant. This strategy was slowly paying off.

But Mr Cameron has hit Labour below the waterline. He has created a clear area of policy difference, where he is probably more in tune with the British public than Mr Miliband, and one in which he can guarantee coverage from Britain’s still-important press. But also the issue makes Mr Miliband look weak, indecisive and un-prime ministerial. That could be fatal. What Mr Miliband actually should have done was welcomed Mr Cameron’s speech and adopted his policies as his own. That would have taken the wind totally out of the Tory sails.

The second way that Mr Cameron’s move may be decisive is that it may have turned the advancing tide of British Euroscepticism, while at the same time unifying his bitterly Eurosceptic party. I have read Mr Cameron’s speech, and the most striking thing about it is how Europhile it is. He has well understood the arguments for Britain staying in, and put them forward. Britons are a suspicious, conservative bunch as the 2011 AV referendum showed. Leaving the EU would be a big step into the unknown, and the more people think about it, the more nervous they are likely to become. And yet the sceptics are happy because they have their precious in-out referendum.

Mr Cameron’s speech was a genuine act of decisive political leadership. There are risks, but there always are. There is also a risk that the EU needs to take forward a treaty change that we are forced to put to a referendum that is then lost. This risk has now been sidestepped, because we now have the opportunity to package it up with more popular changes and put it too an in-out referendum.

But there is a big problem with Mr Cameron’s speech, which I did not pick up last week. Aside from its tactical genius, it is intellectually vacuous. Its economics is based on a fatuous understanding of international competition and the fear of Europe falling behind the developing economies. Its analysis of how the EU needs to be changed is hot air with no concrete proposals. A single market without harmonised rules may sound good, but what does it mean in practice? I really don’t understand how this wishful vision breaks down into nitty-gritty negotiating points. Mr Cameron badly need somebody with intellectual heft to lead the negotiation – the job the Lord Cockfield did for Mrs Thatcher in developing the original European Single Market in 1992. The risk is that he will make no headway in the negotiations, and waste an opportunity to improve both Britain’s role with the EU, and the stability of the EU itself. That’s the big problem the speech opens up.

Cameron may yet win his gamble on the EU

This morning the British Prime Minister David Cameron gave his long awaited speech on the European Union. I didn’t listen to it, or read it, so you won’t get any light on the nuances of his argument here. I’m interested in the political dynamics, which, as usual, do not depend on exactly what he said. From the BBC report his speech was fairly much as the last two weeks’ briefing had suggested. We wants to “renegotiate” Britain’s terms of membership, and then offer the British public an in/out referendum, after the next General Election, by the end of 2017. Mr Cameron’s political reputation is mixed. He showed brilliant footwork when he first took over leadership of the Conservative Party, but rather fluffed the 2010 General Election with his incomprehensible idea of the “the Big Society”. He restored his reputation with the assured manner in which he put together the Coalition government with the Liberal Democrats. After that he seemed lack vision and grasp. Will today’s move restore his reputation? It might.

A couple of weeks ago I thought he was onto a hiding to nothing, and in the process of leading his party to defeat at the next election, set for 2015. Various shades of Euroscepticism seem to define the rank and file of the Conservative Party, right up to Parliamentary level. It seems impossible to satisfy them. On the other hand assorted Europhiles (in deed rather than word in most cases) amongst the deeply conservative British establishment don’t want to rock the boat. He risks isolation and an almighty mess. His own view seems to be that the UK is better off inside the EU, but it would be really nice if its institutions were less intrusive.

But Mr Cameron has two things going for him. First is that his personal view on the matter probably represents what most of the British public thinks: a very grumpy “well yes I suppose so” to the EU. From this he should be able to build a bond of trust, unlike other participants in the debate, whose firm views one way or the other are not shared by the public. And second, Mr Cameron is a vital swing voter in the debate. It is highly unlikely that either side can win a referendum without his support. The smart thing for the various players here and abroad is to build bridges with him, rather than try to isolate and vilify him. This could put him into the driving seat.

Things are now starting to get very interesting. In spite of the very long time they have been given to develop a party line, the Labour opposition is completely at sea. They are trying to paint a picture of a PM beholden to his backbenchers, and who, by creating uncertainty, is making things worse for the national interest. This is desperately unconvincing. The British public probably rather agree with what their PM is saying, while Labour are merely offering obfuscation and procrastination. Uncertainty over Britain’s future in the EU is already a fact of life.

Meanwhile, those who are in favour of the UK staying in the EU are at long last starting to stir. Their silence to date has been one of the main frustrations of the public discussion so far. The Eurosceptics have had the field pretty much to themselves, unchallenged. What these EU supporters – from outside and inside the country – have to say is pretty ugly, it has to be said. They aren’t trying to sell the EU as a positive vision. They are stoking fears about what life would be like outside. Real Europhiles, like me, really dislike this negative stuff, a lot of which is intellectually unconvincing. But elections are won on the ugly stuff – just look at the 2011 referendum on a fairly minor tweak to Britian’s electoral system, which was portrayed as the end to life as we know it. The Eurosceptic arguments are being given much greater scrutiny, and many will wilt.

The big problem for Mr Cameron is how the “renegotiation” will work out. I use quotation marks because ever since Harold Wilson used it in the 1970s (in my formative political years) I have felt it to be an sham concept, used by armchair commentators. Either you enter into an honest negotiation about matters that need fixing, or you are going back on your promises; you should be honest about which it is. The difficulty is that our existing treaty terms are a carefully balanced whole, and if you change one bit it unbalances others. The favourite Eurosceptic idea of opting out of the social standards bits we don’t like, and then use this to give British businesses a competitive edge over their foreign rivals, has a rather obvious flaw as a negotiating stance. What’s in it for them? The country’s European partners would mainly rather have us in than out, and we do have a trade deficit with them, but this does not add up to a strong negotiating position. Mr Cameron might simply do what Mr Wilson did: get a few token concessions and try to big them up. That would be risky for Mr Cameron’s reputation, though he might still win.

But Mr Cameron has set quite a long time frame for his negotiation. In that time it is quite likely that the EU will want to alter its treaties to make the Eurozone more stable. Under Britain’s “referendum lock” legislation this could trigger the need for approval by referendum in the UK anyway. If Mr Cameron can tie these treaty changes into his “renegotiation”, and then use his in/out referendum to endorse it as a package, then he does have something to negotiate with – and can paint himself as doing the EU a favour. The transfer of powers between EU institutions and the UK might actually be two-way traffic. If he pulls that stunt off, his political legacy will be secure, in my book anyway.

European elections: saving the Lib Dems from wipeout

Winner Lib Dem Golden Dozen Blogs – 9 December 2012

The Liberal Democrats have just selected their candidates for elections to the European Parliament in June 2014. These elections are important to the party – it takes itself seriously as a player in this forum, and it contributes a lot to the party’s strength and depth nationally. But the party faces a wipe-out. It needs some radical thinking to have a chance of avoiding such a fate.

The problems start with the party’s low opinion poll standing. The typical 9-10% is not enough to get the party representation in any of the regional constituencies, except the South East, under the PR system that is used. But it is worse than that. The party has always underperformed in these elections. Its usual campaigning methods are worse than useless. The party’s appalling showing in the London 2012 elections is a much better guide: closer to 5-6%. Complete wipe-out. How to save the party?

The first point is that the party needs to acknowledge the root causes of its campaigning weakness in this type of election. The party’s electoral successes in local and Westminster elections have been achieved using campaigns that focus on three things in particular: identifying local issues that stir the passions of floating voters, a ruthless third party squeeze (“Labour can’t win here, etc”), and identifying voters and getting to them to the polling stations. All three are useless in Euro elections – and yet they are so deeply embedded in Lib Dem campaigners’ thinking that they infect everything the party does. The party fails to put over a message that motivates voters, and since canvassing covers such a small proportion of the potential electors (and usually they are based on other sorts of elections anyway), the polling day knock up has very little impact on the result.

Unfortunately, it gets worse. The party’s Euro candidates tend not to be, shall we say, the party’s most inspiring campaigners. They are very interested in the goings of the European Union. This makes them well qualified to be Euro MPs – and indeed the party punches well above its weight there. But they are not good at finding messages that connect with voters. Even when they think they have found a killer, like using European arrest warrants to catch terrorists and paedophiles, this in practice has little resonance with the public.

So the party’s normal messages and techniques are ineffective, and the Euro candidates struggle to find an alternative. In the last election I remember delivering piles of tabloid newspapers that were clearly going to have little or no effect. Motivating the activists is a real problem, never mind the voters.

So what to do? The basic strategy is quite clear, and has been talked about for some time. Find enough voters who feel positive about the EU’s role in Britian’s future to turn up and vote to reach about 15-20% of the vote share. No other significant party is rallying that vote. The Labour Party is trying get these voters by default, but without prejudicing its chances with the more sceptical majority. The Tories don’t seem to think these voters even exist.

Next, how can effective campaign be mounted? What will be needed is poster and Internet advertising, mass direct mail based on promising demographics, and a good freepost (the single leaflet delivered for free by the post office). This is supported by an online and social media campaign. All this activity, combined with the right messaging, will draw in media attention. Almost no need for local activists to do much legwork – they can get on with their local campaigns. This will cost a lot of money – so the first priority will be to raise it.

The party is getting better at fundraising, but many party activists have little idea about how it works. Donors, rich and not so rich, need to be motivated in a very similar way to ordinary voters. They need to be inspired by the campaign’s messages, and think they might catch on with the wider public. You don’t raise the funds first, then decide on the campaign’s messages; it is the other way round. So the work on messaging needs to start now.

Here is my humble suggestion. The campaign theme should be “Save Europe!”. No doubt this can be improved on, but note the key features. First and foremost it is pitched as a response to a threat. People are more motivated by response to threats than positive ideas, and motivation is critical. The “No” campaign for the AV referendum was highly successful as it pitched AV as a threat to the status quo. So is pulling out of the EU a threat to the status quo. The party can be progressive and conservative at the same time! Further is the idea of “Europe” – vague and big. The idea is to appeal to people with an international consciousness. There is a double meaning: first to save Britain from leaving the EU, and second for the country to play its full part in solving a continental crisis that will affect us anyway.

How to build on this idea to make the threat seem real? “Save jobs” and “Save the Environment” should be the focus. Messing around with EU membership is a clear threat to jobs – and indeed one of the main appeals will be to businessmen who fear for the future of Britian’s relationship with the EU. The environment allows the party to play on its international outlook. Indeed it is an appealing idea to use an Earth from space picture with Europe visible on the surface as a campaign logo. It also sets the party up for some skirmishing that may be needed with the Greens. And it contrasts with Ukip’s outlook.

Ukip are the rising starts of Euro elections, which frightens the two main parties. But if the Lib Dems are after core voters rather than floaters then Ukip’s strength is an opportunity. It helps define the party: “We are the party which is against everything Ukip is for.” The more they know about Ukip, the more they know about us. The party should indulge in some relentless negative campaigning against Ukip – including how they have behaved in the European Parliament – though not straying into accusations of racism.

So you get the general idea. The best next step would be to appoint a national organiser to work on messaging and strategy. This needs to be somebody comfortable with challenging the Lib Dem conventional wisdom on campaigning, but with a degree of political realism (contrast some of the Yes to AV campaign types). Though much of the campaigning needs to be done in the regional constituencies, a lot of the design effort can be done nationally – and the Internet and media campaign needs to be led nationally too.

I do hope the party wakes up to the danger and tries to a bit radical!

Is this the Eurosceptics’ Moscow moment?

Nearly 200 years ago, in September 1812, Napoleon reached the maximum limit of his nominal power when he entered Moscow with his army drawn from right across Europe. His empire covered France, Germany, Poland, Italy, much of Spain (his lieutenants were in the process of driving back an advance by Anglo-Spanish forces that had temporarily liberated Madrid) and now much of Russia, including its Asiatic capital. But he could not hold it; by the year’s end he had been forced to abandon Russia altogether, his army destroyed, and he was completely crushed within a year and a half. For the Russians 1812 had proved a time of incessant retreat, as they avoided battle until just before Moscow (at Borodino), where they lost and were forced to abandon Moscow without a fight, but ultimately a year of triumph.

Is this a fair metaphor for the British Eurosceptics in their moment of victory at the British veto at last week’s EU summit? Certainly their triumphalism is unbearable. Bill Cash was described by one of our outraged local Lib Dem members as “the cat that got the cream.” This follows one long process of retreat by British Europhiles as they conceded the political initiative to the sceptics, practically without a fight, time and again.

But the initial reaction of leading Lib Dems was strangely sanguine. Nick Clegg was initially quite supportive of David Cameron. On Friday night the deputy parliamentary leader, Simon Hughes, painted a positive picture to party members at a social event which I was attending. Mr Clegg has changed his tune today, of course. Whether that is because of the sceptics’ reaction, or because further details of what actually happened at the summit have emerged (for a flavour of this read the Economist’s Bagehot blog) I cannot say.

But the initial relief at the summit result shown by Mr Hughes has some logic behind it. A treaty would have required ratification by the UK parliament, and demand for a referendum. This sort of battle plays to the sceptics’ strengths – strong support by the press and a widespread wariness of extra EU power. A referendum on a treaty change is the battle the europhiles least want to fight. The sceptics can deploy a “have your cake and eat it” argument for a no vote – a vote not against the Union as such, but to protest against “Brussels”. There will be no such battles now. If there is a referendum it will be about whether we stay in the EU at all.

Instead the sceptics’ position might start to come under the sort of scrutiny that it has hitherto lacked, and be shown to be no more tenable than Napoleon’s hold on Moscow. The summit has started that exposure process. The sceptics’ armchair negotiators have said that we can use the British veto to negotiate major concessions, the “repatriation of powers”; but Mr Cameron proved unable to do this. It has also been said that we were not isolated in the EU, and we could lead a gang of pro-market non-Euro members. This against has been shown to be a hollow idea, as Germany has greater influence over these potential allies than we do. Indeed a horrible spectre emerges, that the British blocking tactics make many of the EU’s institutions irrelevant while the other countries set up alternatives over which the British have no say. The sceptics often complain about Britain shackling its fortunes to a corpse – but the corpse could be the official EU structures, rather than the European project itself…and that would be an outcome entirely of our own making.

And further eurosceptic fantasies will soon be exposed. Their aim is to set up some sort of free-rider relationship to the Union, where British products enjoy free access without to European markets without our businesses having to comply with those pesky social regulations. Some think the country can do this within the EU, using opt-outs, others that it can be done outside it, in the European Economic area (like Norway, Iceland and Switzerland). But this requires the other 26 countries to agree with it. All of them. Why should they?

Just as the Eurozone optimists are having their ideas tested to destruction in a gruelling series of financial crises, so the eurosceptics might find themselves on the wrong side of the argument. In both cases it is clear that the only tolerable escape route involves further European integration, not less. Perhaps, like Napoleon’s collapse in 1812, it will happen quicker than we think.