David Cameron’s 'new deal' won’t win the EU referendum – but economics could

Inside Westminster: The only way to trump fears about immigration is to sell the economic benefits of EU membership

British Prime Minister David Cameron is followed by Polish counterpart Beata Szydlo (R) during an official welcoming ceremony at the Polish government building (AFP/Getty)

For David Cameron, the man who once told his party to stop “banging on” about Europe, all roads now lead to Brussels.

Whether he likes it or not, the result of his in/out EU referendum will define his legacy, and also the battle to succeed him as Conservative Party leader. Theresa May and Boris Johnson parade their Eurosceptic credentials and flirt with the Out camp. Tory MPs who have bought shares in George Osborne fret that his prospects would be ended by a vote to leave because he will recommend staying in. Whether it’s a referendum or a leadership contest, everyone wants to back the winner.

The leadership battle will begin in earnest as soon as the referendum is over, because Mr Cameron has already said he will not fight the next general election as leader. Forget his talk of staying in Downing Street until 2020.

The referendum now overshadows all: ministers believe it is affecting policy in other areas. Some suspect the Prime Minister cannot break his “no ifs, no buts” pledge to reject a third runway at Heathrow, or his promise to protect pensioners’ benefits, because the Out camp would argue that his guarantees about his new EU deal were worthless too.

This matters because any changes to EU treaties would not happen until after the referendum. Cameron allies insist it is more about avoiding a repeat of Nick Clegg’s fatal broken promise on university tuition fees. But Mr Cameron knows that reneging on a high-profile pledge would allow the Outers to revive memories of his “cast iron guarantee” to hold a referendum on the EU’s Lisbon Treaty (which was overtaken by events because it was ratified before he came to power in 2010).

The road will certainly lead to Brussels next Thursday, where the Prime Minister will press his demands for a new deal for Britain at a summit of the EU’s 28 national leaders. As usual, they will have more important things on their agenda – the migration crisis and the security crisis after the Paris terrorist attacks. In theory, they cannot afford a “Brexit crisis” too and so want to keep the UK in the EU club. But not at any price, and the great renegotiation is proving much harder than Mr Cameron thought when he rashly promised a referendum to get Ukip off his back.

He will have to water down his proposal to deny EU migrants in-work benefits in Britain for four years. There are no takers around the EU table on this one because it would breach fundamental club rules on discrimination.

Diplomats predict a “staged fight” at next week’s summit, so Mr Cameron can try to convince the domestic audience he is battling for Britain. He also needs to bang the table to show his EU counterparts he means it, although some do not take seriously his threat to recommend an Out vote if he does not get a good enough deal. When the dust settles after next week’s row, officials will cobble together a package for the next summit in February.

Then the Prime Minister will have to settle for much less than his four-year benefits ban. EU migrants will probably lose their right to child benefit in Britain if their children do not live in this country. Hardly a newborn rabbit: I wrote about that one at the EU summit a year ago. Mr Cameron may trumpet a plan to temporarily halt EU migration because of the pressure on public services, under existing rules allowing restrictions on free movement to safeguard “public policy, public security or public health”. But this would not satisfy Eurosceptics, not least because Britain might need EU permission to apply such an “emergency brake”.

The problem for Mr Cameron is that these concessions would do little to allay public fears about immigration, which ministers believe have grown since the refugee and security crises. “A four-year wait for benefits is not about welfare; it is all about immigration,” one minister admitted. “If we can’t send a signal on that, it will be very difficult to win the referendum.”

Mr Cameron’s overall strategy is right: the British public want a reformed EU. If they could be persuaded it is changing, they would be less likely to take the risk of leaving. Hence his desire to stop other policy decisions undermining his “trust me, I’m Dave” approach.

Polling by YouGov suggests that when people are asked how they would vote if Mr Cameron recommended a new deal and reassured them the national interest had been protected, almost three in five would vote In and only between a fifth and a quarter would vote Out.

At present, the phoney war between the In and Out campaigns goes over the heads of most voters. They are like two rival New Year’s Eve parties, both with their own playlists. All the guests know all the words to all the songs, but nobody else would want to come.

In a report, “How (not) to talk about Europe”, to be published on 6 January, the British Future think-tank will say that most people have not finally decided how to vote in the referendum. It will argue that, while both sides are good at firing up their own supporters, their messages and the people voicing them do not resonate with undecided voters – and could even harm their cause. When British Future asked voters how much they trusted various politicians when they talked about Britain’s place in Europe, the two least trusted voices were two of the most prominent figures for In and Out: Tony Blair and Nigel Farage, respectively.

Mr Cameron is not now going to win the referendum on the back of his new deal. The only way to trump fears about immigration is to sell the economic benefits of EU membership. It is time he started to make the case.