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EU disharmony presents Miliband with open goal

Ed Miliband has been thinking – I use the word loosely – about Europe and has come to the conclusion that "the EU does not seem to be working".

This statement is right up there with such insights as "the sea is fairly wet" and "the sun is jolly hot", but I suppose the Labour leader deserves some credit for having at least made the discovery, even if it is far from clear what it means in policy terms. He isn't suggesting we leave the EU, nor even that we should have a referendum on doing so ("the time is not right"), though it may be telling that he does not actually rule out that possibility.

For purely political reasons, there is an extremely good case for Labour to promise a referendum on the EU. In the first place, it would be popular. It would be silly to read too much into one constituency result, but UKIP's success in taking third place in the Corby by-election is not merely the consequence of voters being disillusioned with the parties in the Coalition. It is now entirely possible that an in/out referendum would return the verdict that we should quit the European Union – something which, despite the fact the eurosceptics have been right all along, I don't think would have been conceivable at any other period since 1974. One poll at the weekend suggested 60% of voters now want to leave the EU unless our relationship with Brussels is substantially renegotiated.

The second good reason for Labour to make such a commitment is that it would comprehensively undermine David Cameron. The Prime Minister, who goes to Brussels this Thursday to try to negotiate the terms of the EU's budget for the next seven years, must now be preparing to give just such an undertaking himself. It is the one thing which might reduce defections to UKIP by Tory voters (though it will be too late for many former Conservatives, who have already given up on Mr Cameron). What's more, it makes sense in international, as well as domestic, terms. Without at least the threat of withdrawal, it is difficult to see why the Franco-German position on the EU should concede any ground at all to the UK, especially since they believe the Anglo-American banking industry caused the financial crisis.

The fact that that belief is idiotic – almost as idiotic as thinking that the Greek economy was in much the same shape as the German one, and could be regarded as equivalent – is neither here nor there. The euro crisis is far from settled, even if total meltdown has been averted for now. But the eurozone is in recession and when, as a result, national government revenues fall, the countries within it face an inescapable choice. They will have to cut, or borrow – that is, if anyone can be found who is prepared to lend.

The strikes and protests which have greeted austerity measures on the continent are one clue as to which option the governments are likely to go for, as is their failure thus far (with the exception of Greece and Ireland, which had no choice in the matter) to introduce cuts at anywhere near the level necessary. But if you want further evidence, look at the very thing Mr Cameron will be discussing this week.

The EU – while calling for austerity elsewhere, and despite the fact its leaders agreed two years ago that the budget should be cut or at least frozen – is arguing for an increase of 6% in its budget. This proposal is about as sensible as attempting to make salade nicoise in a room full of cats.

Of course, when you "put aside the rhetoric", which you'll remember Mr Miliband has always been very anxious that we should, the Labour party has nothing much to offer by this shift, since it is largely a matter of rhetoric. Vague talk of building alliances isn't likely to get Mr Miliband any further than it has got every British leader since Ted Heath, which is to say nowhere. Even the deals on Britain's rebate and the opt-out did no more than slightly reduce costs and obligations towards the EU; they did absolutely nothing about the real imperative, which is fundamental reform of the Union itself.

All the same, as a strategic position, this is an opportunity for Labour to outflank the Tories. UKIP may be unlikely to become a major player in terms of seats at Westminster, but it is all too obvious that the party could do well enough to ensure Mr Cameron has no chance of obtaining a majority. Indeed, given the level of euroscepticism among Tory backbenchers, it's a racing certainty that will happen unless the Conservatives promise some sort of vote on the issue, or the Prime Minister contrives to produce some magnificent triumph from the negotiations at the end of this week (an implausible outcome, to say the least).

If the Tories are going to offer a referendum and if it will, in any case, be popular – and the signs are that it would be popular even among those who, if push came to shove, would baulk at actually leaving – there is every advantage for Mr Miliband in shooting the Prime Minister's fox. If he continues to say that he would like to see reform, rather than withdrawal, he can't actually lose. If the vote is to leave the EU, he delivered the referendum which allowed it, and if it is to remain in, he has kept on the right side of the fence. And if any concessions are obtained, he gets the credit.

Scepticism about the European Union rather ties in with Mr Miliband's Old Labour tendencies, but if a referendum on the UK's future relationship is politically inevitable, he may as well grasp the initiative. In any event, it allows the Labour leader to outflank the Prime Minister; if the Tories followed suit, it could be claimed that they had stolen a policy they'd previously failed to deliver on, and in the unlikely event that they didn't, they would be denying the public its say.

Now that I think about it, rather than arguing till they're blue in the face that an independent Scotland couldn't be removed from the EU, despite the large body of legal opinion that thinks otherwise and (which is more important) the certainty of political opposition to automatic membership, the SNP should be pointing out that a "yes" vote for independence would instantly achieve what none of the other parties is offering, or indeed able, to deliver.

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