Tony Blair
may not yet be ready to offer a referendum on European integration. But, writes Paul Anderson, Labour
has made other significant changes in its approach to the European Union
On Tuesday,
representatives of more than 100 blue-chip companies and industrial associations – among them Hanson, Marks & Spencer and the National Westminster Bank – attended a £500-a-head seminar and dinner in Brussels organised by the Labour Party. The event, Labour Working in Europe, netted the party some £40,000. In return for the cash,
the business executives got the chance
to listen to Tony Blair, John Prescott,
Robin Cook and Gordon Brown talking about Europe.
The Times described
the beano as marking "a new stage in the warming relations between Labour and the
private sector" – and
there's no arguing with that.
But most of the journalists who follow Labour are disappointed that its significance did not end there.
Before
Christmas, the rumour – at the very least not discouraged by Blair's office
– had been that the Labour leader would use
his keynote address to promise that a Labour government would hold a
referendum on Europe if the 1996 intergovernmental
conference (IGC) on European union were to propose major constitutional changes, or agree to create a single European
currency. In the event, he did no such thing. His speech merely reiterated what he said in a television intervi ew at the end of last month: Labour believes that the people should be consulted on further European integration, and if there is not a conveniently timed general election, a referendum is not ruled out.
Even this is
a long way removed from Labour's position before Blair took over: as recently as last May, a policy
document stated bluntly:
"A pledge to hold a referendum on a single currency or on economic and monetary union would be a cynical ploy to paper over internal divisions. It would convince no one." But Blair stopped short of making the promise he had been expected to make. "I think we're well placed as we are on Europe," an aide told NSS. "There's
no need to take it any further at
this stage."
The stated
rationale for this is that Labour
can afford to take its time on deciding for or against a referendum: merely toying wit h the idea has the effect of exacerbating differences among the Tories. And indeed, the Tories are worried about what Labour will do. A referendum is a central demand of the de-whipped Tory Euro-rebels, and it also has substantial support at cabinet level, mainly from
the Eurosceptic right (Jonathan Aitken, Peter Lilley and John Redwood), but also from some on the centre-left (Malcolm Rifkind and Virginia Bottomley). John Major and Douglas Hurd, initially opponents of a referendum, have moved towards not ruling out the possibility. But the other two most senior members of the cabinet, Kenneth
Clarke and Michael Heseltine, remain
opposed. (So too, strangely, does Michael
Portillo, who fears that a referendum
on a single currency would go the wrong
way for his Eurosceptic tastes.) For
Labour just to hint that it might go for a referendum is enough to open yet another rift in Tory ranks, whatever Major's response.
This, however, is not the whole story, nor even the most
important part of it. The main reason that Blair has held back on promising a
referendum is to avoid splitting the shadow cabinet down the middle. Of course,
some senior Labour figures see the promise of a referendum as a means of
stealing a populist march on Major – most prominently Prescott, whose deputy
leadership role now includes acting as ambassador to Labour's European
socialist sister parties and liaising with the European Parliamentary Labour
Party (policy is the responsibility of shadow foreign secretary Cook). Last rnonth,
Prescott declared to a BBC radio programme that a Labour government would
"definitely" hold a referendum if "a major change we think is
important" is proposed by the IGC”.
But ranged against this position, which was quickly disowned
by party spin-doctors, are most of the rest of the shadow cabinet's senior
politicians, including, crucially, Brown, Cook and other key Scots, who
remember all too well the damage caused to Labour by the 1979 referendum on
Scottish devolution. On one hand, they are worried about a repeat performance
of the protracted parliamentary wrangling over referendum details that so
debilitated the Callaghan government of the late 1970s; on the other, they fear
that a Labour promise of a referendum on Europe would be a hostage to fortune
now that Major has signalled that he intends to concentrate fire on Labour's proposals
for devolution for Scotland and Wales.
If Labour accepts that constitutional change coming from
Europe should be subject to a referendum, they argue, how can the party
legitimately refuse referendums on devolution? And if it accepts devolution
referendums, how can it possibly avoid outcomes like those of 1979, when
devolution was defeated by an unholy alliance of nationalists and unionists
voting "no"?
The good news for Blair is that, referendum apart, Labour
looks likely to be less divided over Europe in the run-up to the next election
than at any time in the past 50 years. This might seem at first sight to be an
outrageous claim: after all, it is less than two months since 40 Labour MPs voted
against the European Communities (Finance) Bill, defying the whips' instructions
to abstain. But, beneath the froth of disagreements over parliamentary
tactics, there is a growing consensus on Europe in the party.
Most obviously, there is now no significant body of opinion
arguing for withdrawal from the European Union; indeed, it seems almost
unbelievable that as recently as 1983 Labour fought a general election on a
platform of getting out of what was then called the Common Market. Withdrawal
has not been a serious option for nearly a decade, however; what is remarkable
today is the extent to which even Labour's "so far but no further"
school of go-it-alone Keynesians, personified by Bryan Gould in the late 1980s
and early 1990s, has lost its distinctive voice.
This is down in part to Gould leaving British politics, in
part to the failure of the one-nation Keynesians – despite the best efforts of
Peter Hain and Roger Berry – to advance an economic policy that is not just
coherent, but is also credible. But, as well, it has a lot to do with the way
the party leadership has moved on Europe in the past couple of years. If the story
of the Labour leadership's attitude to Europe under the once anti-European Neil
Kinnock was one of ever-growing Euro-enthusiasm, since 1992 under two avowedly
pro-European leaders the dominant theme has been the resurgence of doubts.
One reason is the realisation that Europe is by no means as
popular with the voters as Labour thought in its most Euro-enthusiastic phase;
the other is declining confidence in the ability of Europe to solve Labour's
economic policy dilemmas. Labour's embrace of Europe from the mid-1980s onwards
was based on a belief that the pursuit by a single medium-sized country of
Keynesian counter-cyclical economic policies had been made impossible by the
increasing global mobility of capital.
Labour strategists reckoned that the exchange rate mechanism
of the European Monetary System would protect a Labour government in Britain
against speculation, while the European Community would provide a framework within
which all of western Europe could co-ordinate counter-cyclical policies. A significant
minority of Labour politicians, particularly MEPs, even went so far as to
argue for a federal European Keynesianism to combat unemployment.
Since 1992, however, this approach has looked decreasingly
attractive. In autumn 1992, the collapse of the ERM in an orgy of speculation
and sterling's forced devaluation severely undermined claims that European
currency management could protect a Labour government from speculators: for
several months, the Keynesians who had been arguing that sterling was
overvalued all along had a field day attacking the leadership, helped by
Brown's unwillingness to admit that an incoming Labour government in April 1992
would have devalued sterling within the ERM on taking office. The debate on the
Maastricht treaty saw the biggest backbench Labour revolt on Europe since the
1970s.
The leadership stuck to its guns, however, arguing that
going it alone was no longer an option and pointing to the possibilities of
Europe-wide reflation, both through coordinated measures by national
governments and, particularly after the publication of Jacques Delors' white paper
in 1993, through action by the EU.
The Delors white paper was quickly watered down
into more of a deregulatory package than a plan for Euro-Keynesian-ism
– but even as recently as a year ago the
idea that national governments could act together to reflate had a great deal
of credibility. The Labour leadership could argue, with reason, that the balance of power in the EU was
shifting to the left. Left-of-centre governments appeared to be on the cards in Italy and Germany; and, with the right presidential candidate in 1995, it was not impossible that the French left would recover from its dire position in the opinion polls.
Now,
however, the picture is radically different. The left lost the 1994 Italian and German general elections and, since Delors' withdrawal from the French
presidential race, is
heading for defeat in France
this spring. A Labour government elected in 1996 or 1997 is likely to be the only left-leaning government in a
large EU country.
The Labour
leadership's response to the wreckage of the Euro-Keynesian dream has been to adopt a far more
populist approach to
Europe. The first sign of this
was last year's European election campaign, which emphasised the benefits of the social chapter, but was
otherwise notable for
its assault on EU bureaucracy and waste – particularly
the Common Agricultural Policy (CAP) – insofar
as it touched on Europe at all. Since
Robin Cook replaced Jack Cunningham
as shadow foreign secretary last autumn,
the trend has been unmistakable.
In a
television interview just before Christmas, Cook took a much tougher line on economic and monetary union than any senior Labour spokesperson
for several years.
Although Labour was in favour
of the principle of a European central bank and a single currency, he insisted that "the central bank must be accountable politically to make sure
that it pursues policies
of growth and full employment"
and that the convergence criteria
for a single currency "must be convergence of the real economy – of output, of productivity, of
growth". In similar
vein, Blair this week emphasised that Labour's
fundamentally pro-Europe stance was tempered by criticism of the C AP an d a restatement of the importance of moves towards economic and monetary union not being rushed.
Unsurprisingly,
all but the hardest Labour
Eurosceptics are delighted with the shift away from uncritical Euro-enthusiasm
– at least for now. "It's great to
hear Labour saying that Europe should be
about jobs and growth," says Peter Hain. If Blair and the rest of
the leadership keep on the same course, it's likely that they will get an easy ride from their erstwhile critics in the next couple of years. Whether that continues long into a Labour
government, however, is another matter
entirely.
