IN one sense the outcome of the EU referendum has already been settled: the British Conservative Party is irrevocably split. The only thing that could save matters is a decisive win by the Remainians, led by David Cameron and George Osborne.

However, polls suggest that outcome is highly unlikely and that any vote to remain inside the EU will be a narrow one. In which case, the politically poisonous legacy of Cameron’s Project Fear campaign against the Leave campaigners will continue to eat away at Tory unity. There is even talk in Westminster that Cameron’s days as Tory leader are numbered, whichever way the referendum cookie crumbles next month.

How has it come to this pass – a mere 12 months after David Cameron and side-kick George Osborne won their unexpected victory in the General Election? Walk the corridors of the Palace of Westminster and you will find two quite antagonistic Tory parties. One is the pro-big business, pro-big banks grouping led by Cameron and his heir apparent, George Osborne. The other is a rising English nationalist movement – so far lacking a clear voice of leadership – that sees the need to create a new political project south of the Border.

This project is about far more that the rabid populism of Nigel Farage’s Ukip – which is why they keep our Nigel at a distance. These “New England” Tories may talk the populist talk of limiting immigration but they are a good deal more sophisticated in their politics than Ukip. People like John Redwood (former economic advisor to Margaret Thatcher), Scottish-raised Michael Gove or the libertarian MP Steve Baker, are card-carrying free marketeers anxious to create a new social model in England’s green and present land.

Cameron and Osborne are Tory toffs from deep inside the heart of the conservative (with a small “c”) British establishment. Their rise to power was partly about de-toxifying the Tory brand after middle class revolutionaries (and class warriors) like Margaret Thatcher and Norman Tebbit went to war not just on the trades unions but on the crony capitalism of the unelected British establishment. When Thatcher proved too much of a liability she was shafted by the establishment Tory backwoodsmen.

The conscious Thatcherite revolutionaries have regrouped inside the Brexit campaign. (In another category is the maverick Boris Johnson, who jumped ship from Cameron’s establishment Tories for reasons of personal opportunism.) In political exile, the Thatcherite group have come to see the big international banks in the City of London as a new monopoly sector which is seeking special privileges at the expense of small businesses and ordinary British middle class savers.

The increasingly bizarre and frenzied warnings against Brexit from the Bank of England, the OECD and the IMF are viewed by the Out campaign – not without some truth – as nothing but special pleading for the global investment banks located in London. On Friday, IMF boss Christine Lagarde became the latest global policymaker to issue a blood-curdling warning about the consequences of Brexit, saying they could range from “pretty bad to very, very bad”. Meanwhile Mark Carney, governor of the Bank of England, claimed a vote to leave would trigger a full recession in the UK.

But the pro-Brexit Thatcherites are about more than free markets. They realise the need to rebuild a popular mass electoral base through stressing Englishness – expressed, in the first instance, through self-determination from the EU. Much of their campaign funding is coming from UK-owned hedge funds that are in competition with the big international (ie US) investment banks which dominate City trading. John Redwood, for instance, runs his own small asset management company while Arron Banks of Leave.EU is a self-made insurance millionaire.

Banks is emblematic of a wing of new domestic British capital which is antagonistic to global financial and political institutions, which they see as having caused the great credit crunch of 2008 and now rigging international markets and interest rates through quantitative easing. Recently Banks was quoted as saying: “I have more in common with Labour people than I do Conservatives at the moment, which is a very weird state of affairs. I have strong feelings about meritocracy as opposed to what Cameron represents, which is an elite clique. Isn’t it a dreadful thought that one old Etonian could be replaced by another?”

All this suggests that a Cameron “victory” in the referendum will do nothing to mollify his critics inside the Tory Party. If anything, the negative campaigning by the Remainians (as they are referred to by Brexit insiders like Redwood) has alienated Tory Outers once and for all. Parallels are being drawn with the Scottish referendum experience. One prominent Outer told me he thought a similar reaction to Project Fear would occur in England after the EU vote, as happened in Scotland after the indy vote. He expected the mass of disgruntled English Tory supporters to reject Cameron and coalesce around a new English Thatcherism. I don’t wish him well, but I understand his logic.

Fortunately, any civil war that splits the Tories after the June referendum opens the way for more progressive politics to embed themselves in England. In truth, Corbyn’s Labour Party did less badly in this month’s elections than many feared. Also, the progressive left has scored some notable tactical victories in recent weeks. The Cameron Government was forced to retreat on its crackpot ideological plan to turn every school in England into an independent academy, while the militancy of the junior doctors has pressured English health secretary Jeremy Hunt to reopen negotiations with the BMA.

So far so good. However, to date Labour has hardly campaigned on the ground in England in the EU referendum. That is significant because the Tory grassroots are overwhelmingly anti-EU. As a result, the Brexit campaign has 20,000 activists banging on doors. Without Labour campaigning in the streets in England to stay in Europe, the Brexiteers will have it all their own way. Which explains, in part, why Cameron and Co. have been forced to rely on the Project Fear media campaign to get their message across.

English Labour voters, especially younger ones, are key to the referendum outcome – one way or another – on June 23. One senior Brexiteer told me last week he remains very confident of a vote to leave the EU. He thinks young people are more likely to embrace a positive message based on “British” self-determination as opposed to the endless – and increasingly ludicrous – negativism of the Remain campaign. It is up to progressive forces down south to tip the balance the other way, by exposing the obvious horrors of a Britain recalibrated on Thatcherite, free-market lines, if freed from the constraints of the European Convention on Human Rights and EU social legislation.

That signals a role for Scotland. With the Holyrood elections over, we should not be ignoring events down south. The Scottish Government, SNP MPs and the entire independence movement need to make renewed common cause with every progressive movement in England. The pro-Europe campaign inside Scotland is resolutely positive but we need to find ways of getting that message across in England too. So: vote Remain but prepare for the implosion to come inside the Tory Party after June 23.