The Growth of Euroscepticism

20 May 2014

The Growth of Euroscepticism

Professor Vernon Bogdanor

Ladies and gentlemen, this is the last of six lectures on Britain and Europe but, before beginning, perhaps I can make just a couple of announcements. 

If anyone wants some more punishment, I am giving another series next year on post-War General Elections of significance, a series of six lectures. The first one will be on 1945, when the Labour Party of course defeated Winston Churchill, and various others. This series will finish in May 2015 with a lecture on the 2015 General Election, which I am sure will be very exciting.

Next week, I am giving a single lecture, at the same time, Tuesday at six o’clock, on Britain and 1914, on why we went to war, and I hope people will come to that. Of course, it is the centennial of that War, and a lot of things have been said about it, and many of them, I think, not very sensible, but I will be taking, as my text, a comment made by Lloyd George, the Prime Minister for a good part of the War, who said: “The nations slithered over the brink into the boiling cauldron of war, without any trace of apprehension or dismay.” I shall be dealing with that comment. So, I hope you will be able to come to that – it is a single lecture on 1914 and why Britain went to war.

Today, I am talking on Britain and Europe since 1945, the last lecture, and those of attended the one before will remember that I described the 1975 referendum, which resulted in a resounding victory for staying in Europe by a majority of two to one. You might think, well, perhaps then the European issue would disappear from the agenda of British politics, perhaps it would cease to be divisive and would become plain sailing, but you attended that lecture, you will realise it is a mistake to interpret the 1975 referendum as an endorsement of the European idea, and, as I said last time, it is partly a matter of bad luck that we entered the European Community, as the European Union then was, at a bad time, just when the post-War boom was coming to an end. We would have hoped to benefit from the prosperity of Europe, but that did not occur. 

We had also hoped for other benefits from Europe which did not occur, and two in particular: firstly the benefit of trade with the Continent, resulting from the opening up of markets; and secondly, from the creation of new European policies which would benefit Britain, which of course the agricultural policy did not, but new polices, as for example regional policy - but neither materialised. 

The reason the first did not, the reason we did not benefit very much from the opening up of competition was that British industry was not particularly efficient, and people talked about opening up the Continent to British industry, but of course it also opened up Britain to Continental industry, and in particular German industry, which proved more efficient than our own. Indeed, you may argue entry into Europe highlighted the problems facing British industry: the outdated structure; the reliance on declining export staples – coal, cars, the docks; and the nationalised industry and the system of Commonwealth preference protecting British industry previously from competition had encouraged lax management practices and helped with trade union restrictive practices, especially in the nationalised sector. So, all this made it very difficult for British industry.

Now, as regards the second hoped-for benefit, which was new policies, regional policy, there was a problem there because what we wanted of course was a policy which would bring more money from the European Community, but if Britain had more money, it meant that another country or countries would have less money, and you may not be surprised, therefore, if other Member States resisted new policies which would benefit Britain. So, it proved very difficult for Britain to create a coalition in support of her own interests. That was due, ironically, to a policy which Britain supported, and perhaps still supports, the national veto. Britain had been keen, like France under De Gaulle, that there should not be majority voting in Europe, but it should remain a Europe of nation states, but if you wanted other countries to provide more money, you might have to overrule them, and for that, you would need majority voting. The truth is that, when we entered the European Community, it had been frozen by the French, who pressed for the national veto, and frozen by the French after they had secured common policies which benefited them – the Common Agricultural Policy in particular, and also the Common Fisheries Policy. After that, it would be difficult to formulate new common policies.

Britain also wanted reform of the Common Agricultural Policy, which was a drain on Britain’s budget. But again, why should other countries help, because reform meant that Britain would pay less, but this of course meant also that other countries would pay more. So, our early experience in Europe proved disappointing.

The pro-Europeans claimed, nevertheless, that although Britain was one of the largest net contributors to Europe, the level of contribution was comparatively small – just over 1% of total public spending. It is now about 1.5% of total public spending. People sometimes exaggerate how much we give. Pro-Europeans then said we should see the contribution as a membership fee, enabling us to obtain benefits in terms of the opening up of continental markets, and if we got benefits and if growth improved, that would more compensate for our contributions. They then added it was not the fault of the European Community if British industry was inefficient – it was the fault of British industry. The fault, as it were, lay not in our stars, not in the European Community as it were, but in ourselves, and was a sign that we ought to reform our industrial structure, our outdated practices, and put our industrial house in order. 

But the Euro-sceptics replied in the following way… They said British Governments would have no objection to spending public money on education or defence, which they believed would directly benefit the people of Britain. What they did object to was spending money to sustain the Common Agricultural Policy, which did not benefit Britain because our farming sector was small and comparatively efficient, but benefited less efficient French and Italian farmers – that was a policy which did not seem to be in our interests. Secondly, Euro-sceptics asked: why should Britain pay a membership fee when other countries, such as, for example, France and Italy, did not? Those countries were net beneficiaries of the Community - they received more than they paid out. This, Euro-sceptics argued, in the 1970s, was particularly unjust since, at that time, France was wealthier than Britain. The Euro-sceptics accepted that perhaps British industry was uncompetitive, but then they said so was French agriculture uncompetitive, yet Europe protected inefficient French agriculture but not inefficient British industry. The Common Agricultural Policy, the whole aim was to protect an inefficient agricultural sector.  

So, it is not surprising that, shortly after we entered Europe and after the referendum, Euro-scepticism began to grow, and this took root first not amongst the Conservatives, as it does now, but on the left in the Labour Party. Now, a majority of the Labour Cabinet had favoured Britain remaining in the European Community in the 1975 referendum, but a majority of Labour MPs had been against, by a small margin, admittedly. But in the country as a whole, the Labour Party was strongly hostile, and most European socialist parties had opposed both the Coal & Steel Community and the Common Market because they said it was a threat to socialism and to planning in one country – it would interfere with national planning. They saw it on the Continent as a Christian Democrat and Liberal project. The Labour Party, in the 1970s, shared that view. It was business and finance that was pro-Europe, as indeed it still is. So, at that time “Europe – yes or no?” meant “Europe – right or left?” If you were on the right, you would be pro-Europe; if you were on left, you would be against Europe. 

But Labour was defeated in the General Election of 1979. In opposition, it moved even further against Europe, particularly after 1980, when Michael Foot was elected Leader. Foot had been in the minority in the Cabinet in 1975 in advocating a “no” vote, and under his leadership, Labour moved to a policy of leaving the European Community, without a further referendum, and that was to be the policy of the party in the 1983 General Election Manifesto – leave Europe without a referendum.  

It was a major cause of a split in the Labour Party in 1981, when four pro-Europeans, led by senior ministers, ex-ministers, Roy Jenkins and David Owen, left the Labour Party to form a breakaway called the Social Democratic Party, the SDP, and this new party formed an electoral pact with the pro-European Liberals. At first, they were electorally successful. In 1983, this new alliance, as it was called, got 25% of the vote, and in 1987, 23% of the vote, but this grouping was a victim of the electoral system and gained very few seats, and after 1987, the new party faded away a bit and then merged with the Liberals to become the Liberal Democrats, which of course they still are, and this new merged party is now fighting the European Elections on Thursday as the most pro-European party in British politics, though I do not think they are expecting to do particularly well on Thursday.

Meanwhile of course, the Conservatives were in government under Margaret Thatcher. Margaret Thatcher had been in Heath’s pro-European Government, form 1970 to 1974. She was a strong supporter of Europe, and those of you who came to the last lecture would have heard her speaking about the 1975 referendum from a pro-European position, and she might have been expected to be as pro-European as Heath, and certainly more pro-European than Labour. Indeed, in 1979, in the first direct elections to the European Parliament, Margaret Thatcher attacked the Labour Party for what she called its “frequently obstructive and malevolent attitude towards Europe” and for refusing to take Britain into the so-called Exchange Rate Mechanism of the European Community, the ERM.  

Now, this was set up in January 1979 and was a system by which the countries agreed to fix their exchange rates on a common European basis – it was a prelude to monetary union. It was not the Euro, but it was a step towards it, of fixed exchange rates.

When Labour refused to participate in that, Margaret Thatcher said it was a sad day for Europe.  So, she began as a pro-European. But nevertheless, her strategy was not the same as that of Edward Heath because she stressed, much more than Heath had done, Britain’s national interests. Heath tended to stress the broader European Community interest, but Margaret Thatcher adopted what you might call a Gaullist strategy. She did not go quite as far as De Gaulle, who, in 1965 and 1966 had boycotted European institutions for six months, until he got his own way on a particular policy – threatened the breakdown of Europe. She did not go as far as that, but she went quite far, and her main aim was to get a rebate on Britain’s budget contributions which, because of the dominance of the agricultural policy, were very heavily weighted against Britain. This began a long battle. Margaret Thatcher refused to agree to an increase in European farm prices until the other Member States agreed to re-open the question of Britain’s budgetary contribution. It was not, I think, at the time, that she was hostile to Europe, but she felt that, if it was to secure popularity in Britain, it was no good pointing simply to the general political and diplomatic benefits you might get from being in Europe – you had to have specific economic benefits that people could appreciate, especially since the trade and competition benefits had not been realised.

There were five years of very difficult negotiations, which frustrated the other Governments a great deal, and at one point, the then Greek Prime Minister said it would be a great relief if Britain left the Community. But eventually, in the so-called Fontainebleau Agreement of 1984, the Europeans accepted a new principle, which was that any Member State sustaining a budgetary burden which is excessive in relation to its relative prosperity may benefit from a correction at the appropriate time. This meant a British rebate, according to a complex formula, which I will not attempt to summarise, but it got us an annual refund of 3.6 billion Euros a year. If you take the recent year 2010, for example, our gross payments into Europe were 18.5 billion Euros, our receipts were 6.6 billion Euros, with a deficit about 12 billion, but we got a rebate of 3.6 billion, reducing the deficit to about 8.5 billion. 

At the time when Margaret Thatcher negotiated that rebate, Britain was the poorest of the net contributors, with just 90% of the average Community GDP per head. Now, we are one of the richest, with 110%, so the other Member States are arguing that the rebate should be reduced, or even abandoned or reformed, and this is an ongoing issue at the moment in Europe.

Margaret Thatcher argued for something else, less successfully. She argued for the need to ensure that legislation did not burden small businesses. She said they were over-regulated from Europe, and she said, “I should know – I once worked in a firm that employed only three people,” and Signor Andreotti, the Prime Minister of Italy, said, sotto voce, but it was overheard by Margaret Thatcher, “I wonder what happened to the other two.” It was aside picked up…

The result of the Fontainebleau Agreement was that pro-Europeans could say this showed that Europe could work in British interests, that where there was an injustice to Europe, Europe was flexible enough to make the adjustment, more flexible than opponents believed, to work in Britain’s interests, and that was Margaret Thatcher’s view at the time.

Margaret Thatcher then moved on to the next British interest that could be satisfied in Europe, the creation of the so-called internal market, and that is the removal of non-tariff barriers because there were different national standards and regulations in Europe, which had the effect of increasing the costs of trade, and in particular, we were excluded, at that time, from the German insurance and financial services market and also transport. Now, these policies would benefit Britain enormously, particularly the City, because of our strength in financial services. If you could remove non-tariff barriers, that would be of great help to Britain. 

This was done in what was called the Single European Act in 1985, which I think is the most important amendment to the Treaty of Rome. Margaret Thatcher achieved it, but at a price, and a price she was willing to pay, and the price was to end the national veto on policies. That was necessary in Britain’s interests because you had a huge number of non-tariff barriers, around 300, and if one country could veto removal of any single one, you would never get them removed, so you needed majority voting to achieve that. This therefore was an integrationist policy which Britain supported and which was in the British interests, and Margaret Thatcher therefore signed it. In addition, the preamble to the Single European Act, it had no legal effect but it was an aspiration, the preamble referred to the “progressive realisation of European monetary union”, that is the Eurozone, and Margaret Thatcher, and other Euro-sceptics like Norman Tebbit, signed that perfectly happily – they made no objection.

In her memoirs, Margaret Thatcher does not take the easy way out of saying she was misled or misled by her civil servants. She is absolutely straightforward about it. She says this: “I had one overriding positive goal: this was to create a single common market. The price which we would have to pay to achieve a single market with all its economic benefits was more majority voting in the Community. There was no escape from that because, otherwise, particular countries would succumb to domestic pressures and prevent the opening up of their markets. It also required more power for the European Commission, but that power must be used in order to create and maintain a single market rather than to advance other objectives.”

But the leaders of Europe did have in mind other objectives, and in particular monetary union and the creation of the Euro, and that view was held particularly strongly by the very influential President of the European Commission during the 1980s, probably the most influential President there has been, Jacques Delors, and he became one of Margaret Thatcher’s bête noirs. Jacques Delors said that a logic of the single market, which after all Margaret Thatcher had supported, was a single currency, and that Margaret Thatcher did not accept.  

Now, the first step, as I mentioned a few moments ago, was the Exchange Rate Mechanism, tying the currencies together, and that was designed to create a zone of monetary stability in Europe. Now, Margaret Thatcher, though she had attacked Labour for it in 1979, did not want that either, but many Conservatives did, as a means of controlling inflation, particularly Margaret Thatcher’s Chancellor, Nigel Lawson, her Foreign Secretary, Geoffrey Howe, Michael Heseltine, her Industry Secretary, and, later, John Major. They said this was the way to lock us into monetary discipline and contain inflation.

Howe and Heseltine wanted to go further. They were sympathetic to the single currency. Lawson and Major were not. They favoured the Exchange Rate Mechanism, but not monetary union. They said disaggregate the stages, but commit to the first stage to avoid any further commitments. Lawson, incidentally, now believes, as Margaret Thatcher does, that we should leave the European Union but he didn’t then, in the 1980s.

Margaret Thatcher was against both the Euro and the Exchange Rate Mechanism. She favoured floating the Pound, and one of her favourite sayings was: “If you try to buck the market, the market will buck you.” That is something perhaps the Greeks and Italians are now discovering.

The proposals of the European Commission under Jacques Delors for monetary union were moving Margaret Thatcher in a Euro-sceptic direction, but her Euro-scepticism came much later than many think, and it first came to public attention in her Bruges speech of 1988, and we will hear an excerpt from that in a moment, but, first, the context.

The Bruges speech was delivered in reaction to a speech by Jacques Delors in 1988 to the TUC Conference. Now, Delors, before being a European Commissioner, had been Minister for Finance in the Socialist Government of Francois Mitterrand in France – he was a figure of the moderate left. He thought it important to convert the Labour Party, which, as I said, had moved into the Euro-sceptic direction, back to support of Europe, so he told the TUC they could get advantages from Europe which Margaret Thatcher’s Conservative Government was denying them, in particular, protection at work, other social benefits, and contributing to the social dimension of Europe. He said: “It is impossible to build Europe only on deregulation. The internal market should be designed to benefit each and every citizen of the Community. It is therefore necessary to improve workers’ living and working conditions and to provide better protection for their health and safety at work.”  Now, this, as you can imagine, annoyed Margaret Thatcher, who thought it was an interference in British domestic debate, and I think it was a tactical mistake by Delors because it was more important to keep the Conservatives on a pro-European stance than to convert Labour, which was in opposition, and in my view, Labour would probably, in any case, have become more pro-European under the leadership of Neil Kinnock. I think all this led to the Bruges speech, from which the IT people will now give us an excerpt…

[Bruges Speech Excerpt]

“Mr Chairman, you have invited me to speak on the subject of Britain and Europe. Perhaps I should congratulate you on your courage… If you believe some of the things said and written about my views on Europe, it must seem rather like Genghis Khan to speak on the virtues of peaceful coexistence.

Our links to the rest of Europe, the Continent of Europe, have been the dominant factor in our history, but we know that, without the European legacy of political ideas, we could not have achieved as much as we did. From classical and medieval thought, we have borrowed that concept of the rule of law, which marks out a civilised society from barbarism. The European Community is one manifestation of that European identity, but it is not the only one. We must never forget that, east of the Iron Curtain, peoples who once enjoyed a full share of European culture, freedom and identity, have been cut off from their roots. We shall always look on Warsaw, Prague and Budapest as great European cities. Nor should we forget that European values have helped to make the United States of America into the valiant defender of freedom which she has become. The European Community belongs to all its members. It must reflect the traditions and aspirations of all its members. 

And let me be quite clear: Britain does not dream of some cosy isolated existence on the fringes of the European Community – our destiny is in Europe, as part of the Community. That is not to say that our future lies only in Europe, but nor does that of France or Spain or indeed of any other Member. 

The Community is not an end in itself, nor is it an institutional device to be constantly modified according to the dictates of some abstract intellectual concept, and nor must it be ossified by endless regulation. Willing and active cooperation between independent sovereign states is the best way to build a successful European Community. To try to suppress nationhood and concentrate power at the centre of a European conglomerate would be highly damaging and would jeopardise the objectives we seek to achieve. Europe will be stronger precisely because it has France as France, Spain as Spain, Britain as Britain, each with its own customs, traditions and identity. It would be folly to try to fit them into some sort of identikit European personality. 

I am the first to say that, on many great issues, the countries of Europe should try to speak with a single voice. I want to see us work more closely on the things we can do better together than alone. Europe is stronger when we do so, whether it be in trade, in defence, or in our relations with the rest of the world. 

But working more closely together does not require power to be centralised in Brussels or decisions to be taken by an appointed bureaucracy. Indeed, it is ironic that, just when those countries such as the Soviet Union, which have tried to run everything from the centre, are learning that success depends on dispersing power and decisions away from the centre, there are some in the Community who seem to want to move in the opposite direction. We have not successfully rolled back the frontiers of the State in Britain only to see them re-imposed at a European level, with a European super-state exercising a new dominance from Brussels. 

Certainly, we want to see Europe more united, and with a greater sense of common purpose, but it must be in a way which preserves the different traditions, parliamentary powers and sense of national pride in one’s own country, for these have been the source of Europe’s vitality through the centuries. Let Europe be a family of nations, understanding each other better, appreciating each other more, doing more together, but relishing our national identity no less than our common European endeavour. Let us have a Europe which plays its full part in the wider world, which looks outward, not inward, and which preserves that Atlantic community, that Europe on both sides of the Atlantic, which is our noblest inheritance and our greatest strength.”

[End of Bruges Speech Excerpt]

You can see that is not, as is sometimes suggested, an anti-European speech. What she is saying is that the character of Europe, she thought for the worse, since the Treaty of Rome had been signed in 1957. She said the Treaty had been intended as a charter for economic liberty, but that philosophy was being undermined by the development of monetary union, proposals for a common currency, and for a social Europe, concentrating powers at the centre, and she made this famous remark: “We have not successfully rolled back the frontiers of the State in Britain only to see them re-imposed at a European level, with a European super-state exercising a new dominance from Brussels.” And she said, in another part of the speech, “We have not defeated socialism in the front door in Britain to see it coming in through the back door from Brussels.”   But she did insist, as you will have seen, that she was not anti-European, that “Britain does not dream of some cosy isolated existence on the fringes of the Community”, Britain’s destiny is in Europe, a part of the Community. Hearing it now, in these more Euro-sceptic days, it seems quite pro-European in its call for a stronger European defence and foreign policy, but the impact it made was this. It was the first major attack on the so-called Community Method, the Jean Monnet Method, or the Schuman Method if you like, of the sharing of sovereignty and supra-national government. She said, instead, that Europe should develop through intergovernmental cooperation, as she said “…willing and active cooperation between independent sovereign states”, that nation states were intractable political realities which it would be folly to seek to override or suppress in favour of a wider but as yet theoretical European nationhood. She was offering, if you like, a Gaullist model of Europe, a Europe of nation states, a “Europe des patries”, and not anti-European posture. 

That, in a way, was prescient because the recent Eurozone crisis has been resolved in exactly the way Margaret Thatcher might have predicted: by Governments working together, and the supranational elements in the Community, the Commission and the European Parliament, have been pushed very much into the background.

Now, this is a very important speech politically in Britain because, until the Bruges speech, as I said, “Europe – yes or no?” meant, in Britain, “Europe – right or left?” That was no longer so. The 1989 direct elections to the European Parliament were fought by the Conservatives on a Euro-sceptic ticket, and their main slogan was “Don’t vote for a diet of Brussels”.

But in the short term, this speech damaged Margaret Thatcher’s leadership because it put against her her Foreign Secretary, Sir Geoffrey Howe, who was a strong pro-European. He says, in his memoirs, that hearing that speech was “…like being married to a clergyman who had suddenly proclaimed his disbelief in God.” He said, “I can see now that this was probably the moment at which there began to crystallise the conflict of loyalty which with I was to struggle for perhaps too long.” He called his memoirs “Conflict of Loyalty”. On the last page of his memoirs, he says: “I wanted to change the policies, not the leader, but if that meant the leader had to go, then so it had to be.”

Europe, however, was the occasion of her downfall, I think, not the cause. Now, in the late-1980s, other Ministers put great pressure on her to join the European Exchange Rate Mechanism, and they really insisted that she make a commitment, against her own instincts. Just one month before she was removed from office, in October 1990, Britain joined the ERM. Shortly after that, there was a summit, a European summit at Rome, at which Delors and Andreotti, the Prime Minister of Italy, pressed hard for the Exchange Rate Mechanism to be a means towards monetary union and then some form of political union, and eleven States agreed with them, but only Britain objected. In the House of Commons, Margaret Thatcher said Britain would never join the Euro, and we can hear what she says on the second excerpt…

[House of Commons speech excerpt]

“It is our purpose to retain the power and influence of this House and not to denude it of many of the powers. I wonder what the Right Honourable Gentleman’s policy is in view of some of the things he said. Would he have agreed to a commitment to extend the Community’s powers to other supplementary sectors of economic integration, without having any definition of what they are? Would he?! Because you would have thought he would, from what he said! 

One of them was that the Commission wants to extend its powers and competence into the area of health. We said no, we were not going to agree to those things. From what he says, he sounded as if he would, for the sake of agreeing, for the sake of being little Sir Echo and saying “Me too!” 

Would he have agreed to extending qualified majority voting within the Council, to delegating implementing powers to the Commission, to a common security policy, all without any attempt to define or limit them? The answer is yes – he has not got a clue about the definition of some of the things he is saying, let alone securing a definition of others.  

Yes, the Commission does want to increase its powers, yes, it is an non-elected body, and I do not want the Commission to increase its powers against this House, so of course we are differing.  Of course, the President of the Commission, Mr Delors, said at a press conference the other day that he wanted the European Parliament to be the democratic body of the Community, he wanted the Commission to be the Executive, and he wanted the Council of ministers to be the Senate.  No!  No!  No!  Or…! 

Ah, perhaps the Labour Party would give all those things up, easily… Perhaps they would agree to a single currency, to total abolition to the Pound Sterling. Perhaps, being totally incompetent with monetary matters, they would be only too delighted to hand over the full responsibility as they did to the IMF, to a Central Bank. The fact is, they have no competence on money, no competence on the economy, so yes, the Right Honourable Gentleman would be glad to hand it all over! And what is the point in trying to get elected to Parliament only to hand over your Sterling and to hand over the powers of this House to Europe?!”

[End of House of Commons Speech Excerpt]

Well, that speech led to the resignation of Sir Geoffrey Howe, who said that “The Prime Minister’s perceived attitude towards Europe is running increasingly serious risks for the future of our nation,” and with his resignation, he encouraged a leadership battle, to which Michael Heseltine stood, and it resulted in John Major becoming Prime Minister. Europe, I think, was the excuse for her removal, rather than the cause. She had simply, I think, been there too long and made too many enemies. But she remained defiant at the end, as we can see from the final excerpt from her, from the House of Commons, which I hope the IT people have got… This is after she has said she would resign as Prime Minister.

[House of Commons speech excerpt]

Male: I am most grateful to the Prime Minister. Will she tell us whether she intends to continue her own personal fight against the single currency and an independent Central Bank when she leaves office?

Male: No, she is going to be the Governor!

[Laughter]

MT: What a good idea!

[Laughter]

MT: I had not thought of it! But if I were, there would be no European Central Bank accountable to no one, least of all to national Parliaments, because the point of that kind of European Central Bank is no democracy, taking powers away from every single Parliament, and being able to have a single currency and a monetary policy and on interest rates, which takes all political power away from us. As my Right Honourable Friend said in his first speech after the proposal of a single currency, a single currency is about the politics of Europe, it is about a Federal Europe by the back-door! So, I will consider the Honourable Gentleman’s proposal…

Now, where were we?! I am enjoying this! I am enjoying this! I was talking about Europe.

[End of House of Commons Speech Excerpt]

Out of office – I suppose anything I say now is going to be an anti-climax, but out of office, Margaret Thatcher became more Euro-sceptic, and in her book “State Craft”, published in the mid-1990s, she said that British membership had been “a political error of historic magnitude” and that Britain should leave the European Union. She said that, “In the twentieth century, all Britain’s problems have been caused by Europe, but resolved by Anglo-Saxons,” amongst whom she included the Americans. Nigel Farage has recently said that if Margaret Thatcher was still alive, one would not need UKIP. But this is a hindsight view. She did not take the view we should leave while she was in office, not till some time after she was out of office.    

In retirement, she made life almost impossible for her successor, John Major, even though he had been her chosen successor. He immediately struck a very different note from Margaret Thatcher, saying, “My aim for Britain in the Community can be simply stated: I want to be where we belong, at the very heart at Europe.” John Major negotiated the Maastricht Treaty in 1992, which extended the competence of Europe into new areas, but it was by no means as great a transfer of power as the Single European Act which Margaret Thatcher had signed, and Major won an opt-out on monetary union, which means that entering the Eurozone would depend on a vote in Parliament – there is no legal requirement on Britain to join, and also on the Social Chapter, which Conservative backbenchers would not accept.

When John Major returned from Maastricht, it seemed at first he would have no trouble getting ratification. He was greeted with great applause in Parliament, and he said that the outcome had been “game, set and match to Britain”, because she had got the benefits of Europe, without having what he thought were the disadvantages, like joining the Eurozone. 

But from that moment on, he had a lot of bad luck because, in 1992, his majority was reduced from around 100 to simply 21, and that meant that any eleven Euro-sceptics could derail him.  John Major was fond of saying that, of his majority of 21, thirteen were completely mad.

And then the Danes rejected Maastricht in a referendum, and the French Government proposed a referendum for internal reasons, and so this led to pressure on the British Government to have a referendum. The uncertainty about the outcome in the French referendum, which had a very narrow “yes” margin, caused financial instability in Britain, and four days before the French referendum, Britain suffered so-called Black Wednesday, when interest rates went up to 15%.   We were nevertheless forced out of the Exchange Rate Mechanism, temporarily it was said, but in practice it turned out for good, and Britain lost over £3 billion in foreign currency reserves, and that was terrible damage to the Conservative Party. Its opinion poll ratings fell rapidly, from 43% to 29%, and they never recovered, and of course, in 1997, the Conservatives suffered a heavy defeat.

Now, leaving the Exchange Rate Mechanism did not have the catastrophic consequences which some had predicted. Inflation, far from rising, fell to 2.5% and remained low throughout the 1990s, and a fall in the value of the Pound did a lot to help Britain’s export trade. So, although it was regarded as a humiliation to be pushed out, the economy improved. Whether the improvement was a consequence of withdrawal is still disputed amongst economists, but what cannot be disputed is that 1992 marked the end of a long period of fluctuations in the rate of economic growth and input, the end of a period of high unemployment for many years, and the end of a period of high inflation. Since then, we have had low and stable inflation.

Euro-sceptics said these things occurred because we left, we were out of the ERM, and they said it was not Black Wednesday, it was White Wednesday. But supporters of the ERM said that it had squeezed inflation out of the system and locked low inflation into the economy, thereby paving the way for a long period of economic stability.

Perhaps the argument was best summed-up by Sir Alan Budd, who was Chief Economic Advisor to the Treasury from 1991 to 1997. He said: “The period of membership of the ERM was not a very worthy episode. A slightly cruel summary of it would be to say that we went into the ERM in despair and left in disgrace. Nevertheless, we are still enjoying the benefits of it.”

But there is no doubt, whatever your judgement about the economy, no doubt it was a political catastrophe for the Major Government because the strongest cards Conservative Governments have traditionally had is that they were very competent at running the economy, that although the Labour Party might perhaps have its heart in the right place, it was no good at economic affairs, no good at running the economy, and generally left the economy in a mess. But of course, now people said, well, this is what the Conservatives have done, left the economy in a mess, and it is one of the reasons for their long period of opposition after 1997. Taxes had to be raised when we left the ERM and that got the Conservatives, not Labour, tagged as the party of high taxation, and for the first time since the 1970s, the Labour Party was seen as more competent in economic affairs than the Conservatives.

Further, it had a crucial effect on Europe in the Conservative Party because it de-legitimised, whether rightly or wrongly, the pro-European cause and strengthened the Euro-sceptics. The Euro-sceptics said we had been lucky that we were able to leave the Exchange Rate Mechanism because, if we had been in the Euro, we could never have devalued and left – we would have been stuck there, as of course the Greeks and Italians are finding. So, we would have been locked into something that might not be suitable for Britain, and it is of course perfectly understandable that leaving the ERM, or being pushed out of the ERM fuelled Euro-scepticism.  The Euro-sceptics said that the European commitment was just a policy left over from the failed days of Edward Heath and Harold Macmillan, the sort of thing that Margaret Thatcher had repudiated, and that a true Conservative must be a Euro-sceptic.

Margaret Thatcher herself said that Maastricht was “a treaty too far” and, in her maiden speech in the House of Lords, said there should be a referendum on Maastricht and that she would vote against ratification.

John Major refused a referendum, but he later said we would not join the Eurozone without a referendum, and Tony Blair, the opposition leader, endorsed that commitment.

Major faced problems throughout his premiership – it was arguably ruined by Europe, because the right had supported him in 1990, against Douglas Herd and Michael Heseltine, for the Conservative leadership, thinking of him as the son of Margaret Thatcher, as it were, and Margaret Thatcher had also supported him, and so the right wing felt betrayed and they felt guilt at having removed Margaret Thatcher, and John Major was in a very difficult position, squeezed between the Euro-sceptics and the diminishing number of pro-Europeans.

The Labour Party was extremely lucky because Labour, by then, was even more strongly committed to the Exchange Rate Mechanism than the Conservatives, and the then Labour Leader, John Smith, backed by the Shadow Chancellor, Gordon Brown, said it was a mistake for Britain to leave and to devalue, that they should have stayed in, and John Smith said the Conservatives had the “opt-out mentality of an opt-out Government”. It may be that Brown’s strong support then for the Exchange Rate Mechanism helped cost him the Labour leadership, although he didn’t stand for it, in 1994 when Smith died, and is perhaps responsible for his hostility to the Euro when he was Chancellor.

Now, the succeeding Government, under Tony Blair, was, in theory, much more pro-European, and Blair, in principle, was in favour of the Euro, but he could not join, for two reasons: firstly, the opposition of Brown; and, secondly, the commitment to the referendum, because not one opinion poll has shown a majority in Britain for joining the Euro. So, in practice, Blair could not do very much more than John Major in Europe, though his attitude was much more positive. 

But, after the long period of Labour Government, in 2010, David Cameron became Prime Minister, and under him, I think, we have seen the greatest shift in the stance of any British Government on European matters in the whole history of British membership. I think it is, [from one point or another], historic.

Gordon Brown wanted Britain to be a presence in Eurozone, even though we were not members.  He thought we should be there where the decisions are taken and he pushed his way, as it were, into the Eurozone summits. He insisted that Britain should be there at the top table to gain influence.

David Cameron did not seek to do that and he withdrew the Conservatives from the very large European People’s Party group in the European Parliament to join a much smaller group, with much less influence, and in 2011, the Coalition Government passed an Act saying that any future transfers of power, such as had occurred at Maastricht, would require a referendum. What Cameron hoped to do was to lead the non-Eurozone members who wanted a looser arrangement with Europe. The difficulty with that was that all the other members, except for Britain and Denmark, are legally required to join the Euro and see themselves not as members of the “outs” but as members of those about to go in. But, at any rate, what Cameron wants is to see a two-speed or two-tier Europe, with Britain being one of the leaders in the outer ring.

The Conservatives, throughout their period of opposition, had moved very strongly in the Euro-sceptic direction. It did not help them in the election because, although the British public agreed with their Euro-scepticism, it was not a very salient issue and therefore did not much influence people’s voting behaviour until recently. The issues that people were concerned about were not Europe but the bread and butter issues of prices, jobs, services, health, education, and so on.  So, anti-European candidates did not do well, and when the Conservatives did, as Cameron once put it, “bang on about Europe”, as William Hague did in opposition, people thought they were slightly weird, and in the 2001 Election, Hague’s slogan was “24 hours to save the Pound”, which people really regarded as rather remote from their concerns. Euro-sceptics did not do well electorally until recently. 

Take one extreme example. Shortly after the 1997 General Election, there was a by-election at Uxbridge, and in that by-election, UKIP gained just one-tenth of the votes gained by the Monster Raving Loony Party. In the General Election of 2001, the Referendum Party got just 1.5% of the vote.

Now, what has made Europe salient and has made it an issue is immigration because immigration, for many people, is a salient issue, an important priority, which Europe on its own is not. The figures for gross immigration, with admission of the ex-Communist states into the European Union, are of a different magnitude from previous waves of immigration. If one looks, for example, at immigration in the post-War period, immediate post-War period, from the Caribbean, and from South Asia, about a quarter of a million people from each of those area, so a quarter of a million from the Caribbean and a quarter of a million from South Asia, came to Britain, the Ugandan Asian refugees in the early-1970s, about 30,000; the Kenyan refugees in the late-1960s, about 20,000. But, people from other parts of the EU since 1997, the gross figure is 2.25 million, and the net figure is 800,000, and there are, at present, 2.8 million people from other European Union states living in Britain, so that is a very large issue compared with previous waves of immigration. And whereas of course Britain could control immigration from the Commonwealth, by statute, it is not possible to control immigration from the European Union because of the principle of free movement of peoples.  

Now, none of this was foreseen, it is fair to say, in the Treaty of Rome, which was signed between six countries of Western Europe at a roughly similar standard of living. I think no one foresaw the ex-Communist countries, some of which the national income per head is a quarter or a fifth of that Britain in Britain, and it is for that reason primarily that Europe has become an issue once again in British politics, after a period of quiescence.

David Cameron, again, grasped the bull by its horns in his Bloomberg speech in January 2013, at which he promised an “in/out” referendum. What he said was this: he said that democratic consent for Europe in Britain was now, as he put it, “wafer-thin”. He said if you do not consult the people, that would make more likely our eventual exit, and he made the case for a referendum. 

Some of you may remember my comment about the referendum in 1975, that one of Harold Wilson’s advisors said that Edward Heath had taken the Establishment into Europe, but it needed Harold Wilson to take the people into Europe. You may now say the Establishment, the City and finance and business and so on, remains, on the whole, in Europe, but many people are not, and so I think this is what David Cameron was saying.

He did not, contrary to what a lot of the press have said, he did not use the words “repatriation” or “renegotiation”. He used the word “reform”. And he did not speak of opt-outs or exceptions, but of a new general settlement in Europe, because he appreciated that any idea of opt-outs or exceptions would not work with the other countries because they would say, well, if Britain wants exceptions on things she does not like, France, Italy, and every other country would want exceptions on things they do not like, and the internal market would collapse. But Cameron’s argument was that the European Union is changing as a result of the Eurozone crisis, and that the Eurozone Member States are moving towards banking union and perhaps fiscal union, and perhaps towards ever-closer union, in the preamble to the Treaty of Rome, which the British people almost certainly reject. And so he said the Europe of 2017 will be very different from the Europe of today and that negotiations will be needed to ensure the rights of the non-Eurozone Member States are protected, and in Cameron’s view, this would be an opportunity to secure an improved relationship with the European Union, but these negotiations would be on a collective basis, rather than being concerned with securing a special relationship for Britain. 

So he spoke of “making Europe work better” and he said: “I want the European Union to be a success, and I want a relationship between Britain and the European Union that keeps us in it.” And he concluded by saying, “If we can negotiate such an arrangement, I will campaign for it with all my heart and soul because I believe something very deeply: that Britain’s national interest is best served in a flexible, adaptable, and open European Union, and that such a European Union is best with Britain in it.” He said he wanted that debate “…for the future of my country and for the success of the European Union”. So, what he is saying is get the relationship right, and then have a referendum to endorse our membership. It is a strongly pro-European speech if you read it, which I think many in the press did not, and I think many did not realise, particularly many Conservative backbenchers – perhaps they are not bright enough to realise it was a pro-European speech, but I think it was.

Many people in business said we are worried by the years of uncertainty before the referendum, and Cameron said there would be “…greater uncertainty if anti-EU feeling was allowed to grow unchecked and to fester”. So, what Cameron wants to do is to achieve the same success as Harold Wilson in 1974/5 when he too held a re-negotiation, culminating in a referendum, with a two to one vote of remaining in Europe.

His difficulty is that he was very unspecific in relation to the reforms he wanted, and he set the bar rather low when he said what he wanted was: greater competitiveness to deepen the single market, greater flexibility in European Union institutions, more decisions taken at lower levels of government; more democratic accountability, and protection for the non-Eurozone members.  Now, who could disagree with that? They are very general principles. They can probably be achieved. But his difficulty is that many Conservative backbenchers, even the pro-Europeans, want a lot more than that, and in particular repatriation of social and employment powers, which is unlikely to be achieved because that would turn the European Union into a free-trade association, which not many leaders of Europe want to do. Indeed, Britain was already in a free-trade association when we joined the European Community. It was a very different body. So, there is a great difference between the wish-lists of the average Conservative backbencher and Cameron’s principles. 

There is then a question of whether the changes that are required need Treaty change, which the other Members are very unhappy about because that requires ratification in 28 different countries, some of which need referendums to ratify Treaty change. You may remember that Harold Wilson deliberately did not seek Treaty change in the 1970s. Wilson relied on Conservative and Liberal votes in Parliament to get his policy through. Cameron may well have to rely on Labour and Liberal Democrat votes to get his policy through. But Wilson secured only really cosmetic changes, and I suspect such changes would not satisfy today’s Euro-sceptics, who demand something much more radical, and I suspect there is probably less goodwill on the Continent to Britain than there was in the 1970s.  

On the key issue of immigration, if you wanted to alter the free movement of people, that would almost certainly require a Treaty change – it is one of the basic principles of the Treaty of Rome.

But the main problem that he faces is that the outcome of the process of renegotiation, which he has opened, lies outside his control, largely, and even if he succeeds in successful renegotiation, it will be difficult to unify the Conservative Party around a “yes” recommendation in a referendum.  The likelihood is a significant minority of Conservative MPs would favour exit, and that divisions on Europe would be re-opened.  

Of course, the British public are much less deferential, much less willing to take the advice of their leaders than they were in the 1970s, so they might ignore leaders who said vote yes, and vote to leave.

Now, in my view, Cameron’s speech marks a great turning point in our relations with Europe because, since 1975, Governments have succeeded, sometimes with difficulty, in riding twin horses: keeping us in Europe and getting what they believe are the benefits of Europe, with accommodating themselves to domestic Euro-scepticism. The question is whether that can continue, because Europe, I think, is now the issue on which there’s the greatest gulf between the people and the political elite, that all three party leaders want Britain to remain in the European Union, but all opinion polls show that a large minority, and some polls say a majority, want Britain to leave. 

Britain remains the only one of the 28 Member States where leaving the European Union is on the political agenda, and Cameron put it there, though he does not himself favour it, but he has put it on the agenda as a respectable issue to be discussed politically.

Now, in the early-1970s, one Reith lecturer on the BBC gave the title to his lecture “Europe: Journey to an Unknown Destination”, and the destination is still unknown perhaps, but it is also unclear whether the British will be continuing towards that destination. 

Those of you who attended the earlier lectures may remember the Schuman Plan, when Robert Schuman, the French Foreign Minister, made a comment about Europe and spoke of “a destiny shared in common”. The question remains, now as it was then, as to whether we do share in that common destiny – do we? Now, I find it difficult enough to understand what happened in the past, so do not ask me to predict the future, but it seems reasonable to suggest that Europe will remain on the political agenda for many years to come. 

I want to end with a couple of concluding reflections…

The first is that I hope nothing I have said will deter anyone from voting on Thursday, whatever way you decide to vote; but secondly, it seems to me that Europe has been the poisoned chalice for so many British Prime Ministers – Harold Macmillan, Edward Heath, Margaret Thatcher, John Major, and perhaps even David Cameron. Europe, I think also, was the major cause of the split in the Labour Party in the 1980s. Europe, you could argue, prevented Roy Jenkins, Michael Heseltine and Kenneth Clark from becoming leaders of their respective parties. Only Harold Wilson, I think, and possibly Blair, have triumphed over Europe, have managed not to be scarred fatally by Europe. Almost every other political leader who touched it has been scalded, sometimes fatally. It is worth considering how different the post-War history of Britain would look if the European Community had never been invented, if you write the history of Britain assuming there was no Europe. It has come back again and again to haunt British political leaders when they have thought they had put it to bed.

But, finally, looking at how many politicians have been broken by Europe, it’s difficult not to recall to mind Ernest Bevin’s comment in 1950, when he said that Britain should not be part of the Schuman Plan, the Coal & Steel Community. He said: “If you open that Pandora’s Box, you never know what Trojan Horses will jump out!”

Thank you very much. 

I will now report on the opinion survey, very scientific, much more so than the BBC, I am sure, and I will tell you the results.  

Now, 93 people replied: 67 said Britain should remain in the European Union, and 26 said should not. 

And then the second question, “If David Cameron were to negotiate a new general settlement which he said was in Britain’s interest, would you support Britain remaining in the European Union?” – yes, 68, and no, 24. 

Have these lectures altered your view of the European Union?  Yes, 25, 50, no…

And: “If the answer to question three is yes, in which direction?” “I am more sympathetic to Britain’s membership of the European Union”, thirteen; “I am less sympathetic”, twelve. Well, that it shows I have been impartial – thank you!

© Professor Vernon Bogdanor, 2014

20 May 2014

The Growth of Euroscepticism

Professor Vernon Bogdanor

Ladies and gentlemen, this is the last of six lectures on Britain and Europe but, before beginning, perhaps I can make just a couple of announcements. 

If anyone wants some more punishment, I am giving another series next year on post-War General Elections of significance, a series of six lectures. The first one will be on 1945, when the Labour Party of course defeated Winston Churchill, and various others. This series will finish in May 2015 with a lecture on the 2015 General Election, which I am sure will be very exciting.

Next week, I am giving a single lecture, at the same time, Tuesday at six o’clock, on Britain and 1914, on why we went to war, and I hope people will come to that. Of course, it is the centennial of that War, and a lot of things have been said about it, and many of them, I think, not very sensible, but I will be taking, as my text, a comment made by Lloyd George, the Prime Minister for a good part of the War, who said: “The nations slithered over the brink into the boiling cauldron of war, without any trace of apprehension or dismay.” I shall be dealing with that comment. So, I hope you will be able to come to that – it is a single lecture on 1914 and why Britain went to war.

Today, I am talking on Britain and Europe since 1945, the last lecture, and those of attended the one before will remember that I described the 1975 referendum, which resulted in a resounding victory for staying in Europe by a majority of two to one. You might think, well, perhaps then the European issue would disappear from the agenda of British politics, perhaps it would cease to be divisive and would become plain sailing, but you attended that lecture, you will realise it is a mistake to interpret the 1975 referendum as an endorsement of the European idea, and, as I said last time, it is partly a matter of bad luck that we entered the European Community, as the European Union then was, at a bad time, just when the post-War boom was coming to an end. We would have hoped to benefit from the prosperity of Europe, but that did not occur. 

We had also hoped for other benefits from Europe which did not occur, and two in particular: firstly the benefit of trade with the Continent, resulting from the opening up of markets; and secondly, from the creation of new European policies which would benefit Britain, which of course the agricultural policy did not, but new polices, as for example regional policy - but neither materialised. 

The reason the first did not, the reason we did not benefit very much from the opening up of competition was that British industry was not particularly efficient, and people talked about opening up the Continent to British industry, but of course it also opened up Britain to Continental industry, and in particular German industry, which proved more efficient than our own. Indeed, you may argue entry into Europe highlighted the problems facing British industry: the outdated structure; the reliance on declining export staples – coal, cars, the docks; and the nationalised industry and the system of Commonwealth preference protecting British industry previously from competition had encouraged lax management practices and helped with trade union restrictive practices, especially in the nationalised sector. So, all this made it very difficult for British industry.

Now, as regards the second hoped-for benefit, which was new policies, regional policy, there was a problem there because what we wanted of course was a policy which would bring more money from the European Community, but if Britain had more money, it meant that another country or countries would have less money, and you may not be surprised, therefore, if other Member States resisted new policies which would benefit Britain. So, it proved very difficult for Britain to create a coalition in support of her own interests. That was due, ironically, to a policy which Britain supported, and perhaps still supports, the national veto. Britain had been keen, like France under De Gaulle, that there should not be majority voting in Europe, but it should remain a Europe of nation states, but if you wanted other countries to provide more money, you might have to overrule them, and for that, you would need majority voting. The truth is that, when we entered the European Community, it had been frozen by the French, who pressed for the national veto, and frozen by the French after they had secured common policies which benefited them – the Common Agricultural Policy in particular, and also the Common Fisheries Policy. After that, it would be difficult to formulate new common policies.

Britain also wanted reform of the Common Agricultural Policy, which was a drain on Britain’s budget. But again, why should other countries help, because reform meant that Britain would pay less, but this of course meant also that other countries would pay more. So, our early experience in Europe proved disappointing.

The pro-Europeans claimed, nevertheless, that although Britain was one of the largest net contributors to Europe, the level of contribution was comparatively small – just over 1% of total public spending. It is now about 1.5% of total public spending. People sometimes exaggerate how much we give. Pro-Europeans then said we should see the contribution as a membership fee, enabling us to obtain benefits in terms of the opening up of continental markets, and if we got benefits and if growth improved, that would more compensate for our contributions. They then added it was not the fault of the European Community if British industry was inefficient – it was the fault of British industry. The fault, as it were, lay not in our stars, not in the European Community as it were, but in ourselves, and was a sign that we ought to reform our industrial structure, our outdated practices, and put our industrial house in order. 

But the Euro-sceptics replied in the following way… They said British Governments would have no objection to spending public money on education or defence, which they believed would directly benefit the people of Britain. What they did object to was spending money to sustain the Common Agricultural Policy, which did not benefit Britain because our farming sector was small and comparatively efficient, but benefited less efficient French and Italian farmers – that was a policy which did not seem to be in our interests. Secondly, Euro-sceptics asked: why should Britain pay a membership fee when other countries, such as, for example, France and Italy, did not? Those countries were net beneficiaries of the Community - they received more than they paid out. This, Euro-sceptics argued, in the 1970s, was particularly unjust since, at that time, France was wealthier than Britain. The Euro-sceptics accepted that perhaps British industry was uncompetitive, but then they said so was French agriculture uncompetitive, yet Europe protected inefficient French agriculture but not inefficient British industry. The Common Agricultural Policy, the whole aim was to protect an inefficient agricultural sector.  

So, it is not surprising that, shortly after we entered Europe and after the referendum, Euro-scepticism began to grow, and this took root first not amongst the Conservatives, as it does now, but on the left in the Labour Party. Now, a majority of the Labour Cabinet had favoured Britain remaining in the European Community in the 1975 referendum, but a majority of Labour MPs had been against, by a small margin, admittedly. But in the country as a whole, the Labour Party was strongly hostile, and most European socialist parties had opposed both the Coal & Steel Community and the Common Market because they said it was a threat to socialism and to planning in one country – it would interfere with national planning. They saw it on the Continent as a Christian Democrat and Liberal project. The Labour Party, in the 1970s, shared that view. It was business and finance that was pro-Europe, as indeed it still is. So, at that time “Europe – yes or no?” meant “Europe – right or left?” If you were on the right, you would be pro-Europe; if you were on left, you would be against Europe. 

But Labour was defeated in the General Election of 1979. In opposition, it moved even further against Europe, particularly after 1980, when Michael Foot was elected Leader. Foot had been in the minority in the Cabinet in 1975 in advocating a “no” vote, and under his leadership, Labour moved to a policy of leaving the European Community, without a further referendum, and that was to be the policy of the party in the 1983 General Election Manifesto – leave Europe without a referendum.  

It was a major cause of a split in the Labour Party in 1981, when four pro-Europeans, led by senior ministers, ex-ministers, Roy Jenkins and David Owen, left the Labour Party to form a breakaway called the Social Democratic Party, the SDP, and this new party formed an electoral pact with the pro-European Liberals. At first, they were electorally successful. In 1983, this new alliance, as it was called, got 25% of the vote, and in 1987, 23% of the vote, but this grouping was a victim of the electoral system and gained very few seats, and after 1987, the new party faded away a bit and then merged with the Liberals to become the Liberal Democrats, which of course they still are, and this new merged party is now fighting the European Elections on Thursday as the most pro-European party in British politics, though I do not think they are expecting to do particularly well on Thursday.

Meanwhile of course, the Conservatives were in government under Margaret Thatcher. Margaret Thatcher had been in Heath’s pro-European Government, form 1970 to 1974. She was a strong supporter of Europe, and those of you who came to the last lecture would have heard her speaking about the 1975 referendum from a pro-European position, and she might have been expected to be as pro-European as Heath, and certainly more pro-European than Labour. Indeed, in 1979, in the first direct elections to the European Parliament, Margaret Thatcher attacked the Labour Party for what she called its “frequently obstructive and malevolent attitude towards Europe” and for refusing to take Britain into the so-called Exchange Rate Mechanism of the European Community, the ERM.  

Now, this was set up in January 1979 and was a system by which the countries agreed to fix their exchange rates on a common European basis – it was a prelude to monetary union. It was not the Euro, but it was a step towards it, of fixed exchange rates.

When Labour refused to participate in that, Margaret Thatcher said it was a sad day for Europe.  So, she began as a pro-European. But nevertheless, her strategy was not the same as that of Edward Heath because she stressed, much more than Heath had done, Britain’s national interests. Heath tended to stress the broader European Community interest, but Margaret Thatcher adopted what you might call a Gaullist strategy. She did not go quite as far as De Gaulle, who, in 1965 and 1966 had boycotted European institutions for six months, until he got his own way on a particular policy – threatened the breakdown of Europe. She did not go as far as that, but she went quite far, and her main aim was to get a rebate on Britain’s budget contributions which, because of the dominance of the agricultural policy, were very heavily weighted against Britain. This began a long battle. Margaret Thatcher refused to agree to an increase in European farm prices until the other Member States agreed to re-open the question of Britain’s budgetary contribution. It was not, I think, at the time, that she was hostile to Europe, but she felt that, if it was to secure popularity in Britain, it was no good pointing simply to the general political and diplomatic benefits you might get from being in Europe – you had to have specific economic benefits that people could appreciate, especially since the trade and competition benefits had not been realised.

There were five years of very difficult negotiations, which frustrated the other Governments a great deal, and at one point, the then Greek Prime Minister said it would be a great relief if Britain left the Community. But eventually, in the so-called Fontainebleau Agreement of 1984, the Europeans accepted a new principle, which was that any Member State sustaining a budgetary burden which is excessive in relation to its relative prosperity may benefit from a correction at the appropriate time. This meant a British rebate, according to a complex formula, which I will not attempt to summarise, but it got us an annual refund of 3.6 billion Euros a year. If you take the recent year 2010, for example, our gross payments into Europe were 18.5 billion Euros, our receipts were 6.6 billion Euros, with a deficit about 12 billion, but we got a rebate of 3.6 billion, reducing the deficit to about 8.5 billion. 

At the time when Margaret Thatcher negotiated that rebate, Britain was the poorest of the net contributors, with just 90% of the average Community GDP per head. Now, we are one of the richest, with 110%, so the other Member States are arguing that the rebate should be reduced, or even abandoned or reformed, and this is an ongoing issue at the moment in Europe.

Margaret Thatcher argued for something else, less successfully. She argued for the need to ensure that legislation did not burden small businesses. She said they were over-regulated from Europe, and she said, “I should know – I once worked in a firm that employed only three people,” and Signor Andreotti, the Prime Minister of Italy, said, sotto voce, but it was overheard by Margaret Thatcher, “I wonder what happened to the other two.” It was aside picked up…

The result of the Fontainebleau Agreement was that pro-Europeans could say this showed that Europe could work in British interests, that where there was an injustice to Europe, Europe was flexible enough to make the adjustment, more flexible than opponents believed, to work in Britain’s interests, and that was Margaret Thatcher’s view at the time.

Margaret Thatcher then moved on to the next British interest that could be satisfied in Europe, the creation of the so-called internal market, and that is the removal of non-tariff barriers because there were different national standards and regulations in Europe, which had the effect of increasing the costs of trade, and in particular, we were excluded, at that time, from the German insurance and financial services market and also transport. Now, these policies would benefit Britain enormously, particularly the City, because of our strength in financial services. If you could remove non-tariff barriers, that would be of great help to Britain. 

This was done in what was called the Single European Act in 1985, which I think is the most important amendment to the Treaty of Rome. Margaret Thatcher achieved it, but at a price, and a price she was willing to pay, and the price was to end the national veto on policies. That was necessary in Britain’s interests because you had a huge number of non-tariff barriers, around 300, and if one country could veto removal of any single one, you would never get them removed, so you needed majority voting to achieve that. This therefore was an integrationist policy which Britain supported and which was in the British interests, and Margaret Thatcher therefore signed it. In addition, the preamble to the Single European Act, it had no legal effect but it was an aspiration, the preamble referred to the “progressive realisation of European monetary union”, that is the Eurozone, and Margaret Thatcher, and other Euro-sceptics like Norman Tebbit, signed that perfectly happily – they made no objection.

In her memoirs, Margaret Thatcher does not take the easy way out of saying she was misled or misled by her civil servants. She is absolutely straightforward about it. She says this: “I had one overriding positive goal: this was to create a single common market. The price which we would have to pay to achieve a single market with all its economic benefits was more majority voting in the Community. There was no escape from that because, otherwise, particular countries would succumb to domestic pressures and prevent the opening up of their markets. It also required more power for the European Commission, but that power must be used in order to create and maintain a single market rather than to advance other objectives.”

But the leaders of Europe did have in mind other objectives, and in particular monetary union and the creation of the Euro, and that view was held particularly strongly by the very influential President of the European Commission during the 1980s, probably the most influential President there has been, Jacques Delors, and he became one of Margaret Thatcher’s bête noirs. Jacques Delors said that a logic of the single market, which after all Margaret Thatcher had supported, was a single currency, and that Margaret Thatcher did not accept.  

Now, the first step, as I mentioned a few moments ago, was the Exchange Rate Mechanism, tying the currencies together, and that was designed to create a zone of monetary stability in Europe. Now, Margaret Thatcher, though she had attacked Labour for it in 1979, did not want that either, but many Conservatives did, as a means of controlling inflation, particularly Margaret Thatcher’s Chancellor, Nigel Lawson, her Foreign Secretary, Geoffrey Howe, Michael Heseltine, her Industry Secretary, and, later, John Major. They said this was the way to lock us into monetary discipline and contain inflation.

Howe and Heseltine wanted to go further. They were sympathetic to the single currency. Lawson and Major were not. They favoured the Exchange Rate Mechanism, but not monetary union. They said disaggregate the stages, but commit to the first stage to avoid any further commitments. Lawson, incidentally, now believes, as Margaret Thatcher does, that we should leave the European Union but he didn’t then, in the 1980s.

Margaret Thatcher was against both the Euro and the Exchange Rate Mechanism. She favoured floating the Pound, and one of her favourite sayings was: “If you try to buck the market, the market will buck you.” That is something perhaps the Greeks and Italians are now discovering.

The proposals of the European Commission under Jacques Delors for monetary union were moving Margaret Thatcher in a Euro-sceptic direction, but her Euro-scepticism came much later than many think, and it first came to public attention in her Bruges speech of 1988, and we will hear an excerpt from that in a moment, but, first, the context.

The Bruges speech was delivered in reaction to a speech by Jacques Delors in 1988 to the TUC Conference. Now, Delors, before being a European Commissioner, had been Minister for Finance in the Socialist Government of Francois Mitterrand in France – he was a figure of the moderate left. He thought it important to convert the Labour Party, which, as I said, had moved into the Euro-sceptic direction, back to support of Europe, so he told the TUC they could get advantages from Europe which Margaret Thatcher’s Conservative Government was denying them, in particular, protection at work, other social benefits, and contributing to the social dimension of Europe. He said: “It is impossible to build Europe only on deregulation. The internal market should be designed to benefit each and every citizen of the Community. It is therefore necessary to improve workers’ living and working conditions and to provide better protection for their health and safety at work.”  Now, this, as you can imagine, annoyed Margaret Thatcher, who thought it was an interference in British domestic debate, and I think it was a tactical mistake by Delors because it was more important to keep the Conservatives on a pro-European stance than to convert Labour, which was in opposition, and in my view, Labour would probably, in any case, have become more pro-European under the leadership of Neil Kinnock. I think all this led to the Bruges speech, from which the IT people will now give us an excerpt…

[Bruges Speech Excerpt]

“Mr Chairman, you have invited me to speak on the subject of Britain and Europe. Perhaps I should congratulate you on your courage… If you believe some of the things said and written about my views on Europe, it must seem rather like Genghis Khan to speak on the virtues of peaceful coexistence.

Our links to the rest of Europe, the Continent of Europe, have been the dominant factor in our history, but we know that, without the European legacy of political ideas, we could not have achieved as much as we did. From classical and medieval thought, we have borrowed that concept of the rule of law, which marks out a civilised society from barbarism. The European Community is one manifestation of that European identity, but it is not the only one. We must never forget that, east of the Iron Curtain, peoples who once enjoyed a full share of European culture, freedom and identity, have been cut off from their roots. We shall always look on Warsaw, Prague and Budapest as great European cities. Nor should we forget that European values have helped to make the United States of America into the valiant defender of freedom which she has become. The European Community belongs to all its members. It must reflect the traditions and aspirations of all its members. 

And let me be quite clear: Britain does not dream of some cosy isolated existence on the fringes of the European Community – our destiny is in Europe, as part of the Community. That is not to say that our future lies only in Europe, but nor does that of France or Spain or indeed of any other Member. 

The Community is not an end in itself, nor is it an institutional device to be constantly modified according to the dictates of some abstract intellectual concept, and nor must it be ossified by endless regulation. Willing and active cooperation between independent sovereign states is the best way to build a successful European Community. To try to suppress nationhood and concentrate power at the centre of a European conglomerate would be highly damaging and would jeopardise the objectives we seek to achieve. Europe will be stronger precisely because it has France as France, Spain as Spain, Britain as Britain, each with its own customs, traditions and identity. It would be folly to try to fit them into some sort of identikit European personality. 

I am the first to say that, on many great issues, the countries of Europe should try to speak with a single voice. I want to see us work more closely on the things we can do better together than alone. Europe is stronger when we do so, whether it be in trade, in defence, or in our relations with the rest of the world. 

But working more closely together does not require power to be centralised in Brussels or decisions to be taken by an appointed bureaucracy. Indeed, it is ironic that, just when those countries such as the Soviet Union, which have tried to run everything from the centre, are learning that success depends on dispersing power and decisions away from the centre, there are some in the Community who seem to want to move in the opposite direction. We have not successfully rolled back the frontiers of the State in Britain only to see them re-imposed at a European level, with a European super-state exercising a new dominance from Brussels. 

Certainly, we want to see Europe more united, and with a greater sense of common purpose, but it must be in a way which preserves the different traditions, parliamentary powers and sense of national pride in one’s own country, for these have been the source of Europe’s vitality through the centuries. Let Europe be a family of nations, understanding each other better, appreciating each other more, doing more together, but relishing our national identity no less than our common European endeavour. Let us have a Europe which plays its full part in the wider world, which looks outward, not inward, and which preserves that Atlantic community, that Europe on both sides of the Atlantic, which is our noblest inheritance and our greatest strength.”

[End of Bruges Speech Excerpt]

You can see that is not, as is sometimes suggested, an anti-European speech. What she is saying is that the character of Europe, she thought for the worse, since the Treaty of Rome had been signed in 1957. She said the Treaty had been intended as a charter for economic liberty, but that philosophy was being undermined by the development of monetary union, proposals for a common currency, and for a social Europe, concentrating powers at the centre, and she made this famous remark: “We have not successfully rolled back the frontiers of the State in Britain only to see them re-imposed at a European level, with a European super-state exercising a new dominance from Brussels.” And she said, in another part of the speech, “We have not defeated socialism in the front door in Britain to see it coming in through the back door from Brussels.”   But she did insist, as you will have seen, that she was not anti-European, that “Britain does not dream of some cosy isolated existence on the fringes of the Community”, Britain’s destiny is in Europe, a part of the Community. Hearing it now, in these more Euro-sceptic days, it seems quite pro-European in its call for a stronger European defence and foreign policy, but the impact it made was this. It was the first major attack on the so-called Community Method, the Jean Monnet Method, or the Schuman Method if you like, of the sharing of sovereignty and supra-national government. She said, instead, that Europe should develop through intergovernmental cooperation, as she said “…willing and active cooperation between independent sovereign states”, that nation states were intractable political realities which it would be folly to seek to override or suppress in favour of a wider but as yet theoretical European nationhood. She was offering, if you like, a Gaullist model of Europe, a Europe of nation states, a “Europe des patries”, and not anti-European posture. 

That, in a way, was prescient because the recent Eurozone crisis has been resolved in exactly the way Margaret Thatcher might have predicted: by Governments working together, and the supranational elements in the Community, the Commission and the European Parliament, have been pushed very much into the background.

Now, this is a very important speech politically in Britain because, until the Bruges speech, as I said, “Europe – yes or no?” meant, in Britain, “Europe – right or left?” That was no longer so. The 1989 direct elections to the European Parliament were fought by the Conservatives on a Euro-sceptic ticket, and their main slogan was “Don’t vote for a diet of Brussels”.

But in the short term, this speech damaged Margaret Thatcher’s leadership because it put against her her Foreign Secretary, Sir Geoffrey Howe, who was a strong pro-European. He says, in his memoirs, that hearing that speech was “…like being married to a clergyman who had suddenly proclaimed his disbelief in God.” He said, “I can see now that this was probably the moment at which there began to crystallise the conflict of loyalty which with I was to struggle for perhaps too long.” He called his memoirs “Conflict of Loyalty”. On the last page of his memoirs, he says: “I wanted to change the policies, not the leader, but if that meant the leader had to go, then so it had to be.”

Europe, however, was the occasion of her downfall, I think, not the cause. Now, in the late-1980s, other Ministers put great pressure on her to join the European Exchange Rate Mechanism, and they really insisted that she make a commitment, against her own instincts. Just one month before she was removed from office, in October 1990, Britain joined the ERM. Shortly after that, there was a summit, a European summit at Rome, at which Delors and Andreotti, the Prime Minister of Italy, pressed hard for the Exchange Rate Mechanism to be a means towards monetary union and then some form of political union, and eleven States agreed with them, but only Britain objected. In the House of Commons, Margaret Thatcher said Britain would never join the Euro, and we can hear what she says on the second excerpt…

[House of Commons speech excerpt]

“It is our purpose to retain the power and influence of this House and not to denude it of many of the powers. I wonder what the Right Honourable Gentleman’s policy is in view of some of the things he said. Would he have agreed to a commitment to extend the Community’s powers to other supplementary sectors of economic integration, without having any definition of what they are? Would he?! Because you would have thought he would, from what he said! 

One of them was that the Commission wants to extend its powers and competence into the area of health. We said no, we were not going to agree to those things. From what he says, he sounded as if he would, for the sake of agreeing, for the sake of being little Sir Echo and saying “Me too!” 

Would he have agreed to extending qualified majority voting within the Council, to delegating implementing powers to the Commission, to a common security policy, all without any attempt to define or limit them? The answer is yes – he has not got a clue about the definition of some of the things he is saying, let alone securing a definition of others.  

Yes, the Commission does want to increase its powers, yes, it is an non-elected body, and I do not want the Commission to increase its powers against this House, so of course we are differing.  Of course, the President of the Commission, Mr Delors, said at a press conference the other day that he wanted the European Parliament to be the democratic body of the Community, he wanted the Commission to be the Executive, and he wanted the Council of ministers to be the Senate.  No!  No!  No!  Or…! 

Ah, perhaps the Labour Party would give all those things up, easily… Perhaps they would agree to a single currency, to total abolition to the Pound Sterling. Perhaps, being totally incompetent with monetary matters, they would be only too delighted to hand over the full responsibility as they did to the IMF, to a Central Bank. The fact is, they have no competence on money, no competence on the economy, so yes, the Right Honourable Gentleman would be glad to hand it all over! And what is the point in trying to get elected to Parliament only to hand over your Sterling and to hand over the powers of this House to Europe?!”

[End of House of Commons Speech Excerpt]

Well, that speech led to the resignation of Sir Geoffrey Howe, who said that “The Prime Minister’s perceived attitude towards Europe is running increasingly serious risks for the future of our nation,” and with his resignation, he encouraged a leadership battle, to which Michael Heseltine stood, and it resulted in John Major becoming Prime Minister. Europe, I think, was the excuse for her removal, rather than the cause. She had simply, I think, been there too long and made too many enemies. But she remained defiant at the end, as we can see from the final excerpt from her, from the House of Commons, which I hope the IT people have got… This is after she has said she would resign as Prime Minister.

[House of Commons speech excerpt]

Male: I am most grateful to the Prime Minister. Will she tell us whether she intends to continue her own personal fight against the single currency and an independent Central Bank when she leaves office?

Male: No, she is going to be the Governor!

[Laughter]

MT: What a good idea!

[Laughter]

MT: I had not thought of it! But if I were, there would be no European Central Bank accountable to no one, least of all to national Parliaments, because the point of that kind of European Central Bank is no democracy, taking powers away from every single Parliament, and being able to have a single currency and a monetary policy and on interest rates, which takes all political power away from us. As my Right Honourable Friend said in his first speech after the proposal of a single currency, a single currency is about the politics of Europe, it is about a Federal Europe by the back-door! So, I will consider the Honourable Gentleman’s proposal…

Now, where were we?! I am enjoying this! I am enjoying this! I was talking about Europe.

[End of House of Commons Speech Excerpt]

Out of office – I suppose anything I say now is going to be an anti-climax, but out of office, Margaret Thatcher became more Euro-sceptic, and in her book “State Craft”, published in the mid-1990s, she said that British membership had been “a political error of historic magnitude” and that Britain should leave the European Union. She said that, “In the twentieth century, all Britain’s problems have been caused by Europe, but resolved by Anglo-Saxons,” amongst whom she included the Americans. Nigel Farage has recently said that if Margaret Thatcher was still alive, one would not need UKIP. But this is a hindsight view. She did not take the view we should leave while she was in office, not till some time after she was out of office.    

In retirement, she made life almost impossible for her successor, John Major, even though he had been her chosen successor. He immediately struck a very different note from Margaret Thatcher, saying, “My aim for Britain in the Community can be simply stated: I want to be where we belong, at the very heart at Europe.” John Major negotiated the Maastricht Treaty in 1992, which extended the competence of Europe into new areas, but it was by no means as great a transfer of power as the Single European Act which Margaret Thatcher had signed, and Major won an opt-out on monetary union, which means that entering the Eurozone would depend on a vote in Parliament – there is no legal requirement on Britain to join, and also on the Social Chapter, which Conservative backbenchers would not accept.

When John Major returned from Maastricht, it seemed at first he would have no trouble getting ratification. He was greeted with great applause in Parliament, and he said that the outcome had been “game, set and match to Britain”, because she had got the benefits of Europe, without having what he thought were the disadvantages, like joining the Eurozone. 

But from that moment on, he had a lot of bad luck because, in 1992, his majority was reduced from around 100 to simply 21, and that meant that any eleven Euro-sceptics could derail him.  John Major was fond of saying that, of his majority of 21, thirteen were completely mad.

And then the Danes rejected Maastricht in a referendum, and the French Government proposed a referendum for internal reasons, and so this led to pressure on the British Government to have a referendum. The uncertainty about the outcome in the French referendum, which had a very narrow “yes” margin, caused financial instability in Britain, and four days before the French referendum, Britain suffered so-called Black Wednesday, when interest rates went up to 15%.   We were nevertheless forced out of the Exchange Rate Mechanism, temporarily it was said, but in practice it turned out for good, and Britain lost over £3 billion in foreign currency reserves, and that was terrible damage to the Conservative Party. Its opinion poll ratings fell rapidly, from 43% to 29%, and they never recovered, and of course, in 1997, the Conservatives suffered a heavy defeat.

Now, leaving the Exchange Rate Mechanism did not have the catastrophic consequences which some had predicted. Inflation, far from rising, fell to 2.5% and remained low throughout the 1990s, and a fall in the value of the Pound did a lot to help Britain’s export trade. So, although it was regarded as a humiliation to be pushed out, the economy improved. Whether the improvement was a consequence of withdrawal is still disputed amongst economists, but what cannot be disputed is that 1992 marked the end of a long period of fluctuations in the rate of economic growth and input, the end of a period of high unemployment for many years, and the end of a period of high inflation. Since then, we have had low and stable inflation.

Euro-sceptics said these things occurred because we left, we were out of the ERM, and they said it was not Black Wednesday, it was White Wednesday. But supporters of the ERM said that it had squeezed inflation out of the system and locked low inflation into the economy, thereby paving the way for a long period of economic stability.

Perhaps the argument was best summed-up by Sir Alan Budd, who was Chief Economic Advisor to the Treasury from 1991 to 1997. He said: “The period of membership of the ERM was not a very worthy episode. A slightly cruel summary of it would be to say that we went into the ERM in despair and left in disgrace. Nevertheless, we are still enjoying the benefits of it.”

But there is no doubt, whatever your judgement about the economy, no doubt it was a political catastrophe for the Major Government because the strongest cards Conservative Governments have traditionally had is that they were very competent at running the economy, that although the Labour Party might perhaps have its heart in the right place, it was no good at economic affairs, no good at running the economy, and generally left the economy in a mess. But of course, now people said, well, this is what the Conservatives have done, left the economy in a mess, and it is one of the reasons for their long period of opposition after 1997. Taxes had to be raised when we left the ERM and that got the Conservatives, not Labour, tagged as the party of high taxation, and for the first time since the 1970s, the Labour Party was seen as more competent in economic affairs than the Conservatives.

Further, it had a crucial effect on Europe in the Conservative Party because it de-legitimised, whether rightly or wrongly, the pro-European cause and strengthened the Euro-sceptics. The Euro-sceptics said we had been lucky that we were able to leave the Exchange Rate Mechanism because, if we had been in the Euro, we could never have devalued and left – we would have been stuck there, as of course the Greeks and Italians are finding. So, we would have been locked into something that might not be suitable for Britain, and it is of course perfectly understandable that leaving the ERM, or being pushed out of the ERM fuelled Euro-scepticism.  The Euro-sceptics said that the European commitment was just a policy left over from the failed days of Edward Heath and Harold Macmillan, the sort of thing that Margaret Thatcher had repudiated, and that a true Conservative must be a Euro-sceptic.

Margaret Thatcher herself said that Maastricht was “a treaty too far” and, in her maiden speech in the House of Lords, said there should be a referendum on Maastricht and that she would vote against ratification.

John Major refused a referendum, but he later said we would not join the Eurozone without a referendum, and Tony Blair, the opposition leader, endorsed that commitment.

Major faced problems throughout his premiership – it was arguably ruined by Europe, because the right had supported him in 1990, against Douglas Herd and Michael Heseltine, for the Conservative leadership, thinking of him as the son of Margaret Thatcher, as it were, and Margaret Thatcher had also supported him, and so the right wing felt betrayed and they felt guilt at having removed Margaret Thatcher, and John Major was in a very difficult position, squeezed between the Euro-sceptics and the diminishing number of pro-Europeans.

The Labour Party was extremely lucky because Labour, by then, was even more strongly committed to the Exchange Rate Mechanism than the Conservatives, and the then Labour Leader, John Smith, backed by the Shadow Chancellor, Gordon Brown, said it was a mistake for Britain to leave and to devalue, that they should have stayed in, and John Smith said the Conservatives had the “opt-out mentality of an opt-out Government”. It may be that Brown’s strong support then for the Exchange Rate Mechanism helped cost him the Labour leadership, although he didn’t stand for it, in 1994 when Smith died, and is perhaps responsible for his hostility to the Euro when he was Chancellor.

Now, the succeeding Government, under Tony Blair, was, in theory, much more pro-European, and Blair, in principle, was in favour of the Euro, but he could not join, for two reasons: firstly, the opposition of Brown; and, secondly, the commitment to the referendum, because not one opinion poll has shown a majority in Britain for joining the Euro. So, in practice, Blair could not do very much more than John Major in Europe, though his attitude was much more positive. 

But, after the long period of Labour Government, in 2010, David Cameron became Prime Minister, and under him, I think, we have seen the greatest shift in the stance of any British Government on European matters in the whole history of British membership. I think it is, [from one point or another], historic.

Gordon Brown wanted Britain to be a presence in Eurozone, even though we were not members.  He thought we should be there where the decisions are taken and he pushed his way, as it were, into the Eurozone summits. He insisted that Britain should be there at the top table to gain influence.

David Cameron did not seek to do that and he withdrew the Conservatives from the very large European People’s Party group in the European Parliament to join a much smaller group, with much less influence, and in 2011, the Coalition Government passed an Act saying that any future transfers of power, such as had occurred at Maastricht, would require a referendum. What Cameron hoped to do was to lead the non-Eurozone members who wanted a looser arrangement with Europe. The difficulty with that was that all the other members, except for Britain and Denmark, are legally required to join the Euro and see themselves not as members of the “outs” but as members of those about to go in. But, at any rate, what Cameron wants is to see a two-speed or two-tier Europe, with Britain being one of the leaders in the outer ring.

The Conservatives, throughout their period of opposition, had moved very strongly in the Euro-sceptic direction. It did not help them in the election because, although the British public agreed with their Euro-scepticism, it was not a very salient issue and therefore did not much influence people’s voting behaviour until recently. The issues that people were concerned about were not Europe but the bread and butter issues of prices, jobs, services, health, education, and so on.  So, anti-European candidates did not do well, and when the Conservatives did, as Cameron once put it, “bang on about Europe”, as William Hague did in opposition, people thought they were slightly weird, and in the 2001 Election, Hague’s slogan was “24 hours to save the Pound”, which people really regarded as rather remote from their concerns. Euro-sceptics did not do well electorally until recently. 

Take one extreme example. Shortly after the 1997 General Election, there was a by-election at Uxbridge, and in that by-election, UKIP gained just one-tenth of the votes gained by the Monster Raving Loony Party. In the General Election of 2001, the Referendum Party got just 1.5% of the vote.

Now, what has made Europe salient and has made it an issue is immigration because immigration, for many people, is a salient issue, an important priority, which Europe on its own is not. The figures for gross immigration, with admission of the ex-Communist states into the European Union, are of a different magnitude from previous waves of immigration. If one looks, for example, at immigration in the post-War period, immediate post-War period, from the Caribbean, and from South Asia, about a quarter of a million people from each of those area, so a quarter of a million from the Caribbean and a quarter of a million from South Asia, came to Britain, the Ugandan Asian refugees in the early-1970s, about 30,000; the Kenyan refugees in the late-1960s, about 20,000. But, people from other parts of the EU since 1997, the gross figure is 2.25 million, and the net figure is 800,000, and there are, at present, 2.8 million people from other European Union states living in Britain, so that is a very large issue compared with previous waves of immigration. And whereas of course Britain could control immigration from the Commonwealth, by statute, it is not possible to control immigration from the European Union because of the principle of free movement of peoples.  

Now, none of this was foreseen, it is fair to say, in the Treaty of Rome, which was signed between six countries of Western Europe at a roughly similar standard of living. I think no one foresaw the ex-Communist countries, some of which the national income per head is a quarter or a fifth of that Britain in Britain, and it is for that reason primarily that Europe has become an issue once again in British politics, after a period of quiescence.

David Cameron, again, grasped the bull by its horns in his Bloomberg speech in January 2013, at which he promised an “in/out” referendum. What he said was this: he said that democratic consent for Europe in Britain was now, as he put it, “wafer-thin”. He said if you do not consult the people, that would make more likely our eventual exit, and he made the case for a referendum. 

Some of you may remember my comment about the referendum in 1975, that one of Harold Wilson’s advisors said that Edward Heath had taken the Establishment into Europe, but it needed Harold Wilson to take the people into Europe. You may now say the Establishment, the City and finance and business and so on, remains, on the whole, in Europe, but many people are not, and so I think this is what David Cameron was saying.

He did not, contrary to what a lot of the press have said, he did not use the words “repatriation” or “renegotiation”. He used the word “reform”. And he did not speak of opt-outs or exceptions, but of a new general settlement in Europe, because he appreciated that any idea of opt-outs or exceptions would not work with the other countries because they would say, well, if Britain wants exceptions on things she does not like, France, Italy, and every other country would want exceptions on things they do not like, and the internal market would collapse. But Cameron’s argument was that the European Union is changing as a result of the Eurozone crisis, and that the Eurozone Member States are moving towards banking union and perhaps fiscal union, and perhaps towards ever-closer union, in the preamble to the Treaty of Rome, which the British people almost certainly reject. And so he said the Europe of 2017 will be very different from the Europe of today and that negotiations will be needed to ensure the rights of the non-Eurozone Member States are protected, and in Cameron’s view, this would be an opportunity to secure an improved relationship with the European Union, but these negotiations would be on a collective basis, rather than being concerned with securing a special relationship for Britain. 

So he spoke of “making Europe work better” and he said: “I want the European Union to be a success, and I want a relationship between Britain and the European Union that keeps us in it.” And he concluded by saying, “If we can negotiate such an arrangement, I will campaign for it with all my heart and soul because I believe something very deeply: that Britain’s national interest is best served in a flexible, adaptable, and open European Union, and that such a European Union is best with Britain in it.” He said he wanted that debate “…for the future of my country and for the success of the European Union”. So, what he is saying is get the relationship right, and then have a referendum to endorse our membership. It is a strongly pro-European speech if you read it, which I think many in the press did not, and I think many did not realise, particularly many Conservative backbenchers – perhaps they are not bright enough to realise it was a pro-European speech, but I think it was.

Many people in business said we are worried by the years of uncertainty before the referendum, and Cameron said there would be “…greater uncertainty if anti-EU feeling was allowed to grow unchecked and to fester”. So, what Cameron wants to do is to achieve the same success as Harold Wilson in 1974/5 when he too held a re-negotiation, culminating in a referendum, with a two to one vote of remaining in Europe.

His difficulty is that he was very unspecific in relation to the reforms he wanted, and he set the bar rather low when he said what he wanted was: greater competitiveness to deepen the single market, greater flexibility in European Union institutions, more decisions taken at lower levels of government; more democratic accountability, and protection for the non-Eurozone members.  Now, who could disagree with that? They are very general principles. They can probably be achieved. But his difficulty is that many Conservative backbenchers, even the pro-Europeans, want a lot more than that, and in particular repatriation of social and employment powers, which is unlikely to be achieved because that would turn the European Union into a free-trade association, which not many leaders of Europe want to do. Indeed, Britain was already in a free-trade association when we joined the European Community. It was a very different body. So, there is a great difference between the wish-lists of the average Conservative backbencher and Cameron’s principles. 

There is then a question of whether the changes that are required need Treaty change, which the other Members are very unhappy about because that requires ratification in 28 different countries, some of which need referendums to ratify Treaty change. You may remember that Harold Wilson deliberately did not seek Treaty change in the 1970s. Wilson relied on Conservative and Liberal votes in Parliament to get his policy through. Cameron may well have to rely on Labour and Liberal Democrat votes to get his policy through. But Wilson secured only really cosmetic changes, and I suspect such changes would not satisfy today’s Euro-sceptics, who demand something much more radical, and I suspect there is probably less goodwill on the Continent to Britain than there was in the 1970s.  

On the key issue of immigration, if you wanted to alter the free movement of people, that would almost certainly require a Treaty change – it is one of the basic principles of the Treaty of Rome.

But the main problem that he faces is that the outcome of the process of renegotiation, which he has opened, lies outside his control, largely, and even if he succeeds in successful renegotiation, it will be difficult to unify the Conservative Party around a “yes” recommendation in a referendum.  The likelihood is a significant minority of Conservative MPs would favour exit, and that divisions on Europe would be re-opened.  

Of course, the British public are much less deferential, much less willing to take the advice of their leaders than they were in the 1970s, so they might ignore leaders who said vote yes, and vote to leave.

Now, in my view, Cameron’s speech marks a great turning point in our relations with Europe because, since 1975, Governments have succeeded, sometimes with difficulty, in riding twin horses: keeping us in Europe and getting what they believe are the benefits of Europe, with accommodating themselves to domestic Euro-scepticism. The question is whether that can continue, because Europe, I think, is now the issue on which there’s the greatest gulf between the people and the political elite, that all three party leaders want Britain to remain in the European Union, but all opinion polls show that a large minority, and some polls say a majority, want Britain to leave. 

Britain remains the only one of the 28 Member States where leaving the European Union is on the political agenda, and Cameron put it there, though he does not himself favour it, but he has put it on the agenda as a respectable issue to be discussed politically.

Now, in the early-1970s, one Reith lecturer on the BBC gave the title to his lecture “Europe: Journey to an Unknown Destination”, and the destination is still unknown perhaps, but it is also unclear whether the British will be continuing towards that destination. 

Those of you who attended the earlier lectures may remember the Schuman Plan, when Robert Schuman, the French Foreign Minister, made a comment about Europe and spoke of “a destiny shared in common”. The question remains, now as it was then, as to whether we do share in that common destiny – do we? Now, I find it difficult enough to understand what happened in the past, so do not ask me to predict the future, but it seems reasonable to suggest that Europe will remain on the political agenda for many years to come. 

I want to end with a couple of concluding reflections…

The first is that I hope nothing I have said will deter anyone from voting on Thursday, whatever way you decide to vote; but secondly, it seems to me that Europe has been the poisoned chalice for so many British Prime Ministers – Harold Macmillan, Edward Heath, Margaret Thatcher, John Major, and perhaps even David Cameron. Europe, I think also, was the major cause of the split in the Labour Party in the 1980s. Europe, you could argue, prevented Roy Jenkins, Michael Heseltine and Kenneth Clark from becoming leaders of their respective parties. Only Harold Wilson, I think, and possibly Blair, have triumphed over Europe, have managed not to be scarred fatally by Europe. Almost every other political leader who touched it has been scalded, sometimes fatally. It is worth considering how different the post-War history of Britain would look if the European Community had never been invented, if you write the history of Britain assuming there was no Europe. It has come back again and again to haunt British political leaders when they have thought they had put it to bed.

But, finally, looking at how many politicians have been broken by Europe, it’s difficult not to recall to mind Ernest Bevin’s comment in 1950, when he said that Britain should not be part of the Schuman Plan, the Coal & Steel Community. He said: “If you open that Pandora’s Box, you never know what Trojan Horses will jump out!”

Thank you very much. 

I will now report on the opinion survey, very scientific, much more so than the BBC, I am sure, and I will tell you the results.  

Now, 93 people replied: 67 said Britain should remain in the European Union, and 26 said should not. 

And then the second question, “If David Cameron were to negotiate a new general settlement which he said was in Britain’s interest, would you support Britain remaining in the European Union?” – yes, 68, and no, 24. 

Have these lectures altered your view of the European Union?  Yes, 25, 50, no…

And: “If the answer to question three is yes, in which direction?” “I am more sympathetic to Britain’s membership of the European Union”, thirteen; “I am less sympathetic”, twelve. Well, that it shows I have been impartial – thank you!

© Professor Vernon Bogdanor, 2014