This article addresses the nature, intensity and impact of debates and divisions over British membership of the European Community on Labour party and social democratic politics, and their significance for understanding both the fragmentation of Labour's traditional ‘dominant coalition’ and the later social democratic split from the party and schism of British social democracy. The article suggests that arguments and tensions in the debate over Europe cut across traditional party political lines. Contrary to conventional accounts of the gradual demise of Labour's centre-right coalition and the formation of the Social Democratic party in 1981, which emphasize the importance of arguments over more immediate intra-party constitutional factors in the new party's evolution, dimensions of internal conflict rendered by Labour's European discourse had already raised awareness of the potential need for the creation of an alternative vehicle of social democracy.