Tony Blair coulda woulda shoulda joined the euro? I think not

The Europe Dilemma, by Roger Liddle, poses some of the big historical questions about the New Labour government

Roger Liddle, The Europe Dilemma: Britain and the Drama of EU Integration, IB Tauris, £14.99.

This book offers valuable insights into the Blair government, and engages in an important historical debate about Tony Blair’s Europe policy. It was nominated for the Political Book Awards last month, which prompted me to review it.

On the central questions, of whether Blair should have tried to adopt the euro and whether he could have won a referendum to do so, I disagree with Liddle, but it may be a good thing that such an avid federalist* should have been at the heart of Blair’s No 10 operation. People always say that politicians should be open to impossible ideas, so that they are not confined by conventional thinking.

Liddle was a special adviser in Downing Street, and the book is a lively account of the Europe question in the Blair years. He still regards the early years of Blair’s government as a time of “‘once in a generation’ sense of movement in the frozen landscapes of party politics”, and is “left with a painful sense of missed opportunity”.

His is one of the purest expressions of the “wasted landslide” thesis. This thesis comes is many forms, which ought to be a clue as to how mistaken it is. For Liddle, Blair’s huge majority was a chance to change Britain’s relationship with Europe, finally putting us at its integrationist core. For others, it was a chance to implement socialism, or whatever other grand cause is closest to the thesis-advancer’s heart.

The 1997 election was a mandate for none of these. It was a cautious and conditional permission for Blair to make the modest changes he promised to primary school class sizes. A lot of people voted for it, which, in our electoral system, gave Labour a lot of seats.

Liddle is right to recognise that the confusion over the euro in the early months of 1997 was the fault of Blair and Gordon Brown. In October, Charlie Whelan, Brown’s press secretary, was overheard briefing journalists that the Chancellor was ruling out joining the euro for the current parliament, meaning that the UK would not be part of it when exchange rates were to be fixed in January 1999. “‘Court’ politics are full of inherent tensions,” Liddle says, but “the truth was that Blair and Brown had run away from a decision laden with risk.”

Among those risks Liddle includes that of losing the referendum on the decision, but notes in brackets “however small at that point”. Yet this is the only thing that matters: there never was any prospect of winning a referendum. New Labour had not been elected to take Britain into the euro. The promise of the referendum was specifically intended to make this clear.

The idea that the post-election euphoria would have swept the electorate into endorsing the euro in a referendum is moonshine. Liddle seems to have forgotten that Blair was persuaded, by Philip Gould, his enthusiastic polling adviser, to break with tradition and to campaign as Prime Minister in a by-election in Uxbridge in July 1997, because the mood of the country was so Blairite. The Conservatives retained the seat, with a swing to their candidate of five percentage points from Labour. (As the Scottish referendum shows, it is only after a defeat that voters will suffer a rush of blood to the head.)

In 1997, Jeremy Heywood, Blair’s Treasury private secretary, “probably the most brilliant civil servant of his generation” according to Liddle, advised that “whenever a decision was made to join, there was bound to be some unavoidable period of uncomfortable adjustment as the economy shifted from being governed by one macroeconomic regime to another”. That was only the initial objection to a currency union that was fundamentally misconceived and for British membership of which a persuasive case could never have been made.

Liddle writes: “My feelings as a Blair adviser swung erratically back and forth between rose-tinted admiration for his ambitions and (perhaps over-emotional) disappointment at what might have been.” The possibility that it never was because it was a terrible idea never occurs to him.

But Liddle’s account is important because there is no doubt that Blair wanted to join the euro and saw it as his great mission for which he hoped his government would be remembered. Liddle sets out a case in which Blair believed, but Blair was more realistic – although he was never explicit about it – about the limits of what was possible.

Thus Liddle’s hopes of joining the euro were repeatedly dashed, until eventually he was being disappointed that Blair wouldn’t even hold the line on adopting the European Constitution, another federalist project that foundered in 2004, when Blair promised a referendum on it, too. “It was the most painful moment in seven and a half years of working for him.”

It was Blair’s promise that forced Jacques Chirac to promise a French referendum, which was lost in 2005. But Liddle is naive: Blair needed the referendum to stop the Constitution becoming an election issue in 2005, and he couldn’t stop a referendum anyway because the House of Lords would have voted for it.

All the same, the book has some wonderful insidery gossip. “I once heard a very senior Labour minister, who for the good of his reputation shall remain nameless, describe France and Germany as ‘not really democracies, as we would understand it’.” That sounds rather like Jack Straw, and I doubt he would be embarrassed by it. I know what he means, and I agree with him. Both France and Germany have a tradition of their political elites running Europe according to their own, admittedly idealistic, model, regardless of popular scepticism. When the Maastricht Treaty providing for the euro was put to the French people in a referendum it passed by the narrowest margin, and the Constitution was, rightly in my view, defeated.

Finally, Liddle devotes a section of the book to David Cameron’s European policy. If he was disappointed by Blair’s failure to join the euro, you can imagine what he thinks of Cameron’s decision to try to renegotiate the terms of UK membership and to hold an in-out referendum. From having said, “it seems incontestable that Labour could have fought and won a euro referendum in its first term”, Liddle now thinks Cameron might fight and lose a referendum on membership of the EU.

Still, he has an eye for apt phrases, quoting Janan Ganesh in the Financial Times on Cameron’s speech in January 2013: “It is a policy he never wanted, on an issue the public doesn’t care about, at a time when no decision is required. As an act of statesmanship, it is a serviceable piece of party management.”

Unexpectedly, Liddle is not opposed to an in-out referendum in principle. In a rallying call towards the end of the book, he sets out a programme that seems to me as undesirable as it is impractical, one fortunately never likely to gain the support of the British people:

“For Europe to evolve as progressives wish, there will eventually need to be radical treaty change. Progressive should not be frightened of putting such a treaty to a referendum that offers a clear in-out choice based on a positive vision for a British European future. Labour should seek to unite the progressive forces in British politics among Liberal Democrats, Greens, the churches and single-issue campaign groups around a common platform that puts a renewed European commitment at the centre of its political strategy and appeal. By contrast, an early in-out referendum on the present basis of British membership is high risk, is a craven appeasement of populist anti-Europeanism and solves little for the longer term.”

*I think it is fair to call Liddle a federalist. He still thinks Britain should join the euro and he wants to merge the posts of President of the Commission (Jean-Claude Juncker) and of the Council (Donald Tusk) in a single, directly elected post.

Photo of Blair at Davos, Switzerland, 21 January 2015: Getty