Is Ed storing up trouble?

Ed Miliband gave a speech today at the London Business School on Labour's EU policy. It was another example of his gift for canny positioning. It was also of a reminder of Ed’s willingness to overlook, or to plain ignore, awkward detail.

The speech was in part a corrective to the confusion over whether Labour wants a referendum on Britain's membership of the EU. David Cameron has stated that he will hold a referendum after the next General Election. Labour’s plans have been less clear.

Aiming for clarity, Miliband said today that he would introduce “a lock that guarantees that there will be no transfer of powers without an in/out referendum.” This means that Britain would not cede any more power to Brussels without a referendum occurring first.

After the speech, which extolled the virtues of EU membership while lambasting the government’s internal frenzy over whether or not it wants to leave, Miliband took questions from the floor. The questioners had not been satisfied by what they had heard.

Either you believe that Britain should have a referendum, or you do not, said one. So why do you not simply make it your policy to have one, so giving people a chance to vote on something on which they have had no say in 40 years? Miliband answered by simply re-stating his intentions to introduce his “lock”—that strong, controlling word.

It was savvy political positioning by Miliband. He knows that the economy will determine the outcome of the next election and that it is therefore crucial for Labour to be seen as pro-business. He has done much to rile the business community in recent months. His attack on the energy companies, his criticism of low wages, his proposed banking reforms and the job guarantee scheme—all of these have gone down badly with business.

But the ace up his sleeve is Europe. Business may dislike Miliband for many reasons, but his strong pro-EU position generates a warm glow. The last thing that Nissan wants is for its car plants in the north east suddenly to be outside the EU, the cars produced there subject to EU import taxes. The same goes for all British businesses that export to the EU. Businesses recognise that membership of the European Single Market in goods and services is a colossal boon to British trade and industry, and the possibility of an EU trade agreement with the US a tantalising prospect for manufacturers and importers alike. As such, being pro-EU helps Miliband’s standing in the business world.

The thinking behind Miliband’s position is therefore subtle. But it is not rigorous. Miliband says he would hold a referendum if and when the “transfer of power” from Britain to the EU occurs. But what does “transfer of power” mean? Who will decide whether an effort is being made to transfer such power? The government? If so, Miliband would risk finding himself embroiled in a merry-go-round of furious arguments with eurosceptics about whether such a transfer was under way.

Take the European Banking Authority, the EU bank regulator, based in Old Broad Street in the City. The Bank of England and Treasury are presently working with the EU on new leverage ratios for banks. If Labour were to come to power next year and the EU were to issue new rules on bank capital, would this count as a “transfer of power” from Britain to the EU? Miliband would certainly argue not. But it is very easy to imagine how that judgment would be challenged—not only on leverage ratios, but on myriad other subjects connected with the British adoption of EU rules, any one of which could be construed as a “transfer of power.”

As such, Miliband’s speech had similar characteristics to the one he delivered in January on bank reform—both combined strong political positioning with substantial frailty of detail. Ed must be careful. He doesn’t want to store up trouble for the future. On the basis of today’s speech, Europe could pose just as great a problem for a Prime Minister Miliband as it has for the present inhabitant of No10.