Two issues are dominating Number 10’s thinking at the moment: Europe and the cost of living. How to deal with Europe is the biggest strategic challenge facing David Cameron. Cameron has to work out how to use this moment to advance the British national interest. But he also knows that Europe is an issue that could split the coalition and the Tory party.
Inside Number 10, it seems that it is becoming a question of when to announce a referendum not whether to call one. As I say in the Mail on Sunday today, senior figures there are pushing for the Tory commitment to a future referendum on the EU to be brought forward from the manifesto to this year’s conference season.
Those pushing this option, who are not the usual suspects, argue that Cameron should say that the European Union is going to change over the next few years and that he’ll fight Britain’s corner all the way. But that it is only right that, once the new nature of the EU has become clear, the British people should have a say, and that’s why the Tory manifesto will commit the party to a referendum on whether the new terms are acceptable. They think that this would strengthen Cameron’s negotiating hand in Brussels. However, others in Number 10 are opposed to this idea, saying that events are moving too fast for Cameron to commit himself to any course of action. I’m told that it is 50:50 whether or not Cameron goes for this option
But if Europe is the big strategic challenge, it is the cost of living that is driving voters away from the Tories to Labour at the moment. Number 10 is becoming increasingly concerned about this. A letter has gone out from the PM’s private secretary asking ministers ‘what further proactive steps can be taken by your department or government more widely to demonstrate that we are on the public’s side on this agenda’. I suspect that this is a prelude to some attempt by the government to clamp down on price gouging. But I suspect that any push on the cost of living will only be truly politically effective if it involves delaying or scrapping this August’s 3p a litre rise in fuel duty.
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