24 April 2015

A knife-edge election in which no party is likely to win a majority

The result of the General Election remains too close to call, with the rise of multiple smaller parties and the vagaries of first-past-the-post making it hard to know how votes will translate into parliamentary seats. Nonetheless, it appears likely that neither the Conservatives nor Labour will win an overall majority, meaning that negotiations over a coalition or a looser supply and confidence deal will follow, most likely this will be more complicated and drawn-out than in 2010.

What is the likelihood of an EU referendum in the next parliament?

If David Cameron is Prime Minister there is simply no way he can avoid trying to proceed with the EU reform and referendum strategy; it is a clear red line for most of his MPs and a manifesto pledge. However, his chances of remaining Prime Minister and the prospect of an EU referendum are likely to depend on the arithmetic of a hung parliament.

Nick Clegg has made it clear he wants the Liberal Democrats to stay in government so much will hinge on whether he can retain his own seat – if not, the party is less likely to enter into a second coalition with the Tories even if this is mathematically feasible. If there is a second Tory-Liberal Democrat coalition it will have to include an EU referendum. However, in addition to concessions in other policy areas, the Lib Dems would likely demand to be actively involved in the preceding EU renegotiation and could strike a hard bargain on the timing, franchise (votes for EU citizens) and wording of the referendum question.

While there is enough common ground between the parties to pursue a joint EU reform agenda, the fact of the Lib Dems being involved could make it harder for Cameron to sell the final package. On the other hand, the absence of a formal Tory-Lib Dem coalition could make an EU referendum less likely, since there would be less incentive for the Lib Dems to back it in parliament.

Again depending on the numbers, the Conservatives may also be able to rely on the support from the Northern Irish Unionists (DUP) and/or a handful of UKIP MPs to take them over the line. The DUP supports an in/out referendum and its agenda for EU reform largely mirrors that of the Conservatives. The UKIP manifesto demands a referendum “as soon as possible” – and its MPs would be under immense pressure to agree to any EU referendum on the table although like the party would have its own demands relating to the timing, franchise and wording.

If the Conservatives are forced/choose to govern as a minority, this could make passing an EU referendum difficult. However, one strategy might be for Cameron to make it a vote of confidence issue – daring the other parties to vote down his government on the matter.

Conversely, under a government led by Labour, Ed Miliband has said there would be no EU referendum unless there is a further transfer of powers from the UK to Brussels – highly unlikely in the next parliament.

So should EU leaders hope for a Miliband premiership?

Some politicians in Europe are hoping for a Miliband victory on the basis that under a Labour government, UK-EU relations would become more stable and the risk of Brexit diminished. However, while uncertainty over the UK’s membership would be avoided in the short term in the absence of an in/out referendum in the next parliament, paradoxically, the prospect of Brexit could actually increase in the longer term for a number of reasons:

UK voters’ unease with EU membership would remain: The UK public’s unease with EU membership is genuine and will not disappear as long as the strategic challenges posed by EU membership remain. Further integration in the Eurozone which could prompt negotiations over a new EU Treaty by 2019/20, and another European Parliament election will all test the mettle of a Labour-led government. Public opinion on EU membership remains volatile and any repeat of the furore caused by the EU budget demand or Jean-Claude Juncker’s appointment as Commission President could push a majority of voters back into the ‘Out’ camp.

Lack of EU reform: Despite Labour having many sensible proposals for EU reform – indeed on substance there is now a great deal of cross-party consensus – a Labour government is unlikely to make this a priority. Even if Labour were to achieve a degree of reform, its opposition to a referendum and its unwillingness to contemplate an exit under any circumstances means it lacks credibility with voters, making it harder to bank any achievements. Polling has repeatedly shown that support for membership on the UK’s current terms is precarious with voters expressing a clear preference for EU reform. If this appears to be off the agenda, support for Brexit is likely to grow.

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The Tories could adopt a more sceptical EU stance: It is possible that a defeated Conservative party could adopt a more sceptical position towards the EU, either by setting a much more ambitious threshold for a successful renegotiation or even adopting a policy of outright withdrawal under new leadership. Much will hinge on who succeeds David Cameron, but as things stand, most of the plausible candidates have been more willing to contemplate Brexit than he has been, and they would also have to win the support of a party membership which is increasingly impatient with the status quo. Compared to UKIP, the Tory party carries considerable political and intellectual weight, and if it were to come out in favour of leaving the EU this could have a decisive impact on public opinion. Under a scenario of a weak Labour government and a resurgent, more sceptical Tory party, any EU-related vote in the Commons would be hugely difficult and unpleasant.

The potential rise of English nationalism: If Labour is forced to govern with the support of the SNP such a government would face questions over its democratic mandate, above all in England. This could stir English nationalism with unpredictable consequences both for the future of the UK, but also for any future EU referendum.

In summary, the EU will not cease to be an issue in UK politics, an EU referendum could still only be one election away and without reform under the next government such an EU referendum would be far more likely to result in Brexit.

The Scottish factor – could Brexit lead to the break-up of the UK?

The SNP’s ultimate long-term goal is a new mandate for Scottish independence or further devolution. The 2016 Holyrood elections represent another opportunity to secure such a mandate and could have unpredictable consequences in Westminster.

Under a Cameron government, if an EU referendum resulted in a UK vote to leave (but Scots voted to stay in), the SNP would have a strong claim for another independence referendum. The SNP has demanded an effective veto over Brexit – no Brexit unless it is supported by all four nations within the UK, regardless of the UK-wide result. Such a demand would be rejected out of hand by a Tory-led government, so the SNP’s stance should be seen as a strategic ploy to explicitly link Scottish independence to the EU referendum.

An EU referendum would therefore clearly increase the prospects of the UK breaking up. However, two factors mitigate this risk. Firstly, as noted above, Cameron is also best placed to deliver EU reform and therefore an ‘In’ vote in the referendum. Secondly, the very risk of the UK breaking up off the back of an EU referendum would likely drive some floating voters to opt for continued membership.

If, on the other hand, the SNP is propping up a Labour-led government, after 2016, the party would have far have less incentive to behave responsibly in Westminster and could demand an increasingly high price for its support. Such a scenario could either lead to the SNP withdrawing its support for the government or even lead to English Labour MPs pulling the plug for fear of losing votes in England. This could result in new elections which, as noted above, could see a more sceptical Conservative government come to power.

The Fixed Terms Parliament Act – which has removed the Prime Minister’s discretion over when to hold new elections – complicates matters. Even if a government were to lose a vote of no-confidence, there is a two-week window for a new government to be assembled before snap elections. Only if a new working majority cannot be assembled are new elections called.

Were a Labour-led government to fall, an admittedly unlikely but not implausible scenario is a Tory-SNP deal under which the SNP would agree to an EU referendum in exchange for ‘devo-max’ and a commitment to a second Scottish independence referendum in the event Scottish voters voted to stay in the EU but the UK as a whole voted to leave.

What next for UKIP?

UKIP could win anywhere between 10% and 15% of the vote, but secure only a handful of seats. The party’s fortunes could hinge on whether Nigel Farage is able to win his tight contest in South Thanet. Without him the party would face a leadership election and a struggle to avoid a damaging battle between the different factions of the party – which encompass a wide range of views.

However, if Farage is elected to the Commons, and the party finishes second across a number of constituencies it could end up in a strong position for future elections. Under a weak Labour government propped up by the SNP the party could profit from further English resentment and the continuing absence of an EU referendum.

Meanwhile, if there is an EU referendum, UKIP would become the natural focal point of the out campaign which would form a new rallying point to increase its support.