Labour leaders must lie in their beds at night praying for the spectre of Europe to once again strike the Conservative Party. As they know to their cost, nothing does more damage to a political party than the perception of division. And nothing divides the Tories more than Europe.

It did for them under William Hague and was responsible for Iain Duncan Smith’s leadership. David Cameron played a clever game with his grassroots over the EU but it couldn’t last and it hasn’t.

Yet the situation now is different from the time when Tony Blair led Labour. Public and media attitudes to Europe have hardened. Simply sitting on the fence and nodding in the direction of the EU while also genuflecting to Rupert Murdoch will no longer do.

So even though the Conservatives are close to tearing themselves – and the Coalition – apart over Europe, Labour isn’t quite sure how to react.

It has two choices. There is the principled one of being honest about the importance of EU membership to the UK. Or the unprincipled one, playing to anti-European sentiment and leaping into bed with Richard Desmond, Bob Crow and UKIP.

There have been flickering signs that there is now a rethink after the leap into the unknown of apparently supporting calls for an in-out referendum. Ed Miliband has been shamefully silent on the subject but Douglas Alexander has effectively stated the leadership’s position. Writing in The Guardian he said:

“We should reject the notion that being out of the EU means we can escape its economic problems. The home market for UK-based business is the single market. That’s as true for manufacturing as it is for inward investment and the City of London.

“And we must be clear, the single market is not just about “free trade” as the Eurosceptics misleadingly imply. It’s about far more than that: removing barriers behind the borders – and that requires common rules with a commission and court to enforce them.”

As the general election approaches, there will be as much pressure on Miliband as Cameron to put a referendum in the manifesto. Both leaders know equally well that to do that would be handing a sop to the Outers and failing to act with the responsibility expected of leaders to explain what we get from our membership of the EU and what we would lose if we were on the outside.

Already there are real threats to our economy from failing to be in the eurozone if its members move closer, particularly over banking. The UK could lose almost 10 per cent of GDP and 14 per cent of tax revenues. That is an unimaginable price to pay with no discernible benefits.

For Labour, the alternative to jumping on the referendum bandwagon is to argue the case for Europe. Douglas Alexander has taken the first step towards that, as has David Miliband. It is time for Ed Miliband to take up the challenge, too.

The truth is that Britain today needs an effective Europe strategy – and a referendum may be a policy, but it is no substitute for a strategy.
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