Cameron's compromise

The PM's best bet now is to move the EU debate onto grander issues

February 20, 2016
British Prime Minister David Cameron arrives on the second day of an EU summit meeting, Friday 19 February 2016, at the European Union headquarters in Brussels.
British Prime Minister David Cameron arrives on the second day of an EU summit meeting, Friday 19 February 2016, at the European Union headquarters in Brussels.
Read more: Why Brexit could be Britain's biggest diplomatic disaster

David Cameron’s "renegotiation and referendum" strategy was never going to be easy. Much has changed since Harold Wilson played the same game and won in 1975: the EU has 28 rather than nine members, which makes reform more difficult, while the public and press are less willing to bend the knee to politicians. This explains why the UK’s EU deal, agreed last night, will not do much to change Britain’s relationship with the Union nor help Cameron win the referendum.

Over the last two years, Cameron had sensibly softened his demands from the impossible—he considered limits to the number of immigrants from the EU, as well as "repatriating powers," for example—to the negotiable. But he did not explain to his fellow Conservatives why he was lowering his ambitions, and if he had, he would have found it difficult to keep Tory eurosceptics under control during the negotiating period (which he did, more or less).

The renegotiation, which kicked off soon after Cameron’s May 2015 general election victory, was meant to give a significant number of Tories a rationale for changing their minds on the EU. But the final package will probably not persuade many of them to switch from "Out," or fence-sitting, to "In."

The biggest victory for Cameron is that he is permitted to implement two minor curbs to EU migrants’s access to welfare. The UK will be allowed to reduce in-work benefits, like tax credits and housing benefits, that future migrants from the EU may claim. They won’t be able to claim such benefits from day one of residence, and the amount they receive will slowly grow over four years. From that point, they will be treated identically to a British worker. The British had originally demanded a permanent ban on access to all in-work benefits for the first four years of residence, but the EU’s lawyers said that this would too obviously violate the treaties’ non-discrimination principle. This "emergency brake" will be in operation for seven years, not permanently, as Cameron had originally hoped for—so in 2023, new migrants will be able to claim the benefits as soon as they are eligible.

There are still some risks to the reform’s passage through the EU’s legislative machinery: the European Parliament will have a say over it. And it is on the edge of what is legally permissible under the treaties, since poorer workers from elsewhere in the EU, especially those with children, will receive a lower income for doing the same job. The reform will not be embedded in the treaties, so it will be open to challenge in the European Court of Justice. Officials in London and Brussels expect a case to be brought against it.

The second benefit curb—to child benefit—does not amount to the full ban on child benefit being paid to workers whose children live abroad that appeared in the Tory manifesto in 2015. All member-states may index child benefit payments to the standard of living in the member-state where the child lives. (This indexation will only apply to poorer members of the club: the UK did not want to pay the higher child benefit rates in Sweden, for example.) This will only apply to new migrants until 2020, when it will be extended to all migrants with children living elsewhere in the Union. But given the hostility of Central and Eastern European countries to this reform—they were especially unhappy that all Western European states could index benefit, rather than just Britain—Cameron can chalk this up as a win.

The UK did win a promise that two other reforms will be embedded in the treaties when they are next changed. First, the British government will be able to force new banking union rules to be discussed at the Council. If Britain thinks that eurozone-inspired financial rules could damage the City of London, it will be able to force those rules to be debated by all 28 governments in the Council. The French and Germans were determined that Britain would not be able to veto any new rules, and the 28 governments will vote on the rules in the usual way. But it will offer the British a way to build alliances at the Council against regulation that they think is inimical to British interests. The deal also reaffirms that the eurozone may not discriminate against members of the single market, and makes clear that Britain and other member-states will not participate in eurozone bailouts. This is helpful for Cameron domestically as well as for Britain’s interests in the EU.

The second of these two promises of treaty change is over “ever closer union," the phrase in the preamble to the treaty that so annoys British eurosceptics. The summit’s declaration says that Britain has a “specific situation” under the treaties and “is not committed to further political integration," and this will go into the next revision of the treaties. (During the summit, Belgium made a fuss about other countries not being allowed to have similar language, and in the end it only applied to Britain.) This rhetoric will allow Cameron to say that Britain is not being dragged into a federalising EU, but since the UK has opted out of so many of the EU’s initiatives—in the case of the euro, very sensibly—it already has a specific relationship with the EU.

The other parts of the deal were far less contentious, and so were relatively easily agreed. If 17 or more national parliaments club together, they may stop a new EU law if it violates the principle of subsidiarity (that the EU should only act if it can be more effective than national or local government). This reform did not antagonise anyone because it would require an unlikely degree of co-ordination between national parliaments, who largely ignore one another. The summit declaration points to new initiatives on deregulation, and there is some vague language on extending the single market and more free trade deals.

In all, then, the package is a set of limited measures that slightly strengthen the hand of the British in the EU, curb migrants’s access to welfare a little, and clarify that Britain has a special status within the EU. It will be hard for Cameron to claim that this is a big deal, and it is unlikely to change the minds of any eurosceptic MPs. 10 Downing St had assumed that two key Tories—Michael Gove, the justice secretary, and Boris Johnson, the mayor of London—would come round to "Remain." David Cameron said that Michael Gove would campaign for Out last night, immediately after the deal was struck. Other ministers on the right will follow. Johnson is still on the fence, but may yet provide the figurehead that the "Leave" campaign badly needs.

It isn't just MPs that won't be persuaded; the package will persuade few voters of the merits of the EU, and has reinforced the impression that it is cumbersome and hard to reform. Cameron’s best chance of success is to shift the debate from his reforms to the more lofty terrain, away from arguments about banking safeguards and migrants’s benefits towards a contest over how to secure Britain’s interests in Europe and the rest of the world.