Of all the challenges facing David Cameron by far the most pressing and most intractable is renegotiating Britain’s relationship with the European Union.
The Prime Minister must pull off the trickiest of balancing acts: he must negotiate a new deal for Britain that is acceptable to 28 other European leaders; he must then unite his increasingly anti-European party behind it before finally successfully putting the proposals to the public in a referendum.
A week may be a long time in politics – but two years seems like a very short time to resolve one of the most intractable and fractious political issues of the last quarter of a century.
That said, despite the problems and the narrowness of Cameron’s majority, there is some cause for optimism that a workable deal is achievable. But it will take patience, guile and a fair amount of luck.
The main sticking point is how to tackle the politically toxic issue of migrant workers and their right to claim benefits in Britain.
In a speech last November Mr Cameron made clear that any new deal would have to give the UK power to restrict both in work and out-of-work benefits to EU migrants who have been in the UK for less than four years.
Eastern European leaders have rejected this demand out of hand describing such benefits as “sacrosanct”. “They cannot be touched,” Peter Javorcik, Slovakia’s Europe Minister, told the Financial Times.
What does five more years of the Tories mean for Britain?
What does five more years of the Tories mean for Britain?
1/8 Welfare payments will be slashed
One of the most controversial parts of the Conservative manifesto was to cut benefits for the working age poor by £12 bn over the next three years. But during the campaign they only said where £2 bn of these savings would come from. That leaves £10 bn still to find. Some experts think the only way they can close that gap is by means testing child benefit – with millions of families losing out
2/8 There will be tax cuts for those in work and those who die
The Tories will increase the threshold at which the 40p rate of tax becomes payable to £50,000 by 2020. They haven’t said so but it is also likely that at some point in the next five years they will abolish that 45p rate of tax altogether for the highest earners. They also want to increase the effective inheritance tax threshold for married couples and civil partners to £1m
3/8 There will be an in/out EU referendum in 2017
The next two years are going to be dominated by the prospect of a referendum on Britain’s membership of the EU. First off David Cameron has the daunting task of negotiating a deal with other EU leaders an acceptable deal that he can sell to his party so he can go into the referendum campaigning for a ‘yes’ vote. This may be unachievable and it is possible that the Tories may end up arguing to leave. Opinion polls show Britain is divided on EU membership, one poll this year showed 51% said they would opt to leave compared to 49% who would vote to stay in
4/8 There will be more privatisation of the NHS
Having won the election the Tories now have a mandate to go further and faster reforming the NHS. In order to make cost savings there is likely to be greater private involvement in running services, while some smaller hospitals may lose services they currently provide like A&E and maternity units
5/8 There will be many more free schools – and traditional state schools will become a thing of the past
The Tories plans to create 500 new free schools and make 3,000 state schools become academies. They will also carry on reforming the Department of Education and remove more powers from local authorities over how schools are run
6/8 On shore wind farms will be a thing of the past and fracking will be the future
Government spending on renewable energy is under real threat now the Lib Dems are no longer in power with the Tories. Subsidies are likely to be slashed for off-shore wind farm and other green energy supplies. Meanwhile there will be generous tax break for fracking as ministers try and incentivise the industry to drill for onshore oil and gas
7/8 There maybe more free childcare – but not necessarily
In the campaign the Tories pledged to double the amount of free early education for three- and four-year-olds from 15 hours a week to 30. The extra hours would only be offered to working families where parents are employed for at least eight hours a week. However they have not said where the money will come from to fund the pledge
8/8 Workers' rights could be reduced
The Tories want to slash business regulation, merge regulator and cut costs. The Lib Dems stopped them from reducing the employment rights of workers in power – but these are now under threat
But this position is unlikely to hold. While eastern European countries might be opposed to the British proposals the prospect of the UK leaving the EU altogether would act as a strong incentive for them to compromise.
“They may not like it but if the alternative is that Britain leaves the EU (and freedom of movement is lost altogether) then agreeing to these limited restrictions may seem like a small price to pay,” said Mat Persson, director of the influential think-tank Open Europe. “I think there is scope for compromise.”
Mr Persson added there was also a misconception in other European capitals about the nature of what Mr Cameron was trying to achieve on benefits which, if resolved, could make compromise easier.
“Most other European countries have a contributory system of benefits which automatically exclude migrant workers from claiming benefits until they have worked in the country for a certain period of time,” he said. “That is not true of the UK where benefits are universal.”
This, Mr Persson said, was a particular problem with tax credits – which were designed to incentivise British people to come off benefits and get a job but are actually being disproportionately claimed by EU migrants.
“The UK system is not well understood in other European countries. When it is explained I think most countries will see giving Britain some flexibility is acceptable as long as the principle of free movement of people remains.”
Another big sticking point is Mr Cameron’s call for the changes he negotiates to be enshrined in EU treaties. There is no absolutely no appetite for this among in other European capitals – especially as many countries would have to endorse treaty change with referendums.
But again, compromise is possible. After the Danes rejected the Maastricht Treaty in a referendum a solution was found by adding “protocols” to the treaty to mollify the Danes while keeping the basic framework of the agreement intact.
A similar devise could be used again: In areas of dispute such as Britain’s participation in the Working Time Directive a protocol could be added to the treaty giving the UK an opt out – and the protocol would then be incorporated into EU law the next time the treaties were formally revised.
“A lot of things could be resolved by protocols,” said Mr Persson. “In the EU politics tends to trump law and there are ways get stuff done outside of formal treaty change.”
But a German Government source said much would depend on the attitude that the British took to the renegotiation. They added that in order to be successful the UK would need to build support across all 28 countries and not rely on the Franco-German access to force things through.
“They’ll have to do it the ‘European way’ by building support among all member states at a lower level before the negotiations ever reach Brussels,” they said.
“These are matters which will be decided by one-member-one-vote. It is not enough for Britain just to talk to Berlin and Paris and expect everyone else to fall in line. That is not the way things work any longer.”
But getting a deal is only the first part of Mr Cameron’s difficulties. He then has to sell that deal to his own party – before taking it to the country and winning a referendum.
Even Cabinet ministers such as Philip Hammond and Michael Gove are now among those who, in certain circumstances, would favour pulling out of the EU – while for others in his parliamentary party no deal would be a good enough deal to stay in.
Downing Street is gambling though, that in the event of a reasonable deal being negotiated, they will be able to hold the line – especially with an improving economy that is likely to reduce the toxicity of immigration as a political issue.
If the worse comes to the worse, they say, Mr Cameron could allow Tory MPs a free vote on the issue and divide on the referendum for the sake of long-term party unity.
Many uncertainties and imponderables remain and the final result is far from clear. One thing is certain though – the European question will dominate political debate in which it has not done since early the 1990s and the outcome will define Mr Cameron’s legacy as Prime Minister.
EU Referendum: Possible outcomes
Cameron succeeds in persuading all 28 leaders to back a package of EU reform. Calls for a “yes” vote in the referendum and wins.
Cameron succeeds in persuading all 28 leaders to back a package of EU reform. But despite calling for a “yes” vote he fails to win and is forced to resign.
Cameron fails to get agreement on a package of EU reforms in Brussels. Recommends a “no” vote in the referendum and wins, resulting in Britain leaving the EU.
Cameron fails to get agreement on EU reforms. Recommends a “no”, vote and buts loses. Britain stays in the EU and Cameron resigns.Reuse content