Labour referendum move turns single currency heat on Tories

Labour's decision to agree to a referendum on the single currency yesterday increased Conservative pressure on the Prime Minister to rule out Britain as a founding member of the euro cash system.

Gordon Brown, the shadow Chancellor, yesterday revealed Labour's change of heart in an interview with The Independent on Sunday, having previously insisted that the voters' views could be tested either in an election or referendum.

Mr Brown said it had become clear that no final decisions about economic and monetary union would come before the election, which meant that a referendum was now the only appropriate way of consulting the people.

"There's got to be active consideration by the Government of this big decision," he told BBC1's Breakfast with Frost, "and there's got to be active consent from the British people."

But Labour's decision to match John Major's pledge of a referendum safety valve gave fresh impetus to the Tory Euro-sceptic demand for an embargo on single-currency membership.

The right-wing backbencher Sir William Michael Spicer said: "I would certainly like us to make it absolutely clear that we would not join the single currency in the lifetime of the next government.

"The electorate would like it as well. If this action by the Labour Party pushes us in that direction, that would be a very good thing electorally."

Bill Cash, another Tory Euro-sceptic, said: "It's highly dangerous for the Conservative Party to have the Labour Party saying they want a referendum on the same terms." He urged his party to extend the referendum principle to take in the whole question of future integration in Europe, rather than just a single currency.

But Brian Mawhinney, the Conservative Party chairman, said: "This is just a smokescreen to hide the fact that new Labour would take Britain headlong into a federal Europe. Mr Blair is in favour of a federal Europe. He would not defend Britain's national interest and he would sign away our veto and our jobs through the Social Chapter.

"That is his true instinct. His heart lies in Brussels rather than in Britain."

Mr Brown told the Frost programme: "We are a pro- European party. We believe it would be wrong for Britain to leave Europe; 60 per cent of our trade is with Europe and I believe that if there was a vote tomorrow amongst the British people as to whether they wanted to stay in Europe, it would be absolutely clear people want to stay as part of Europe."

He also drew the further distinction between Labour and the Conservatives; that Labour favoured the single currency in principle.

"We support and see substantial benefits in a single currency," he said. "But we've always said the decision has got to be made in the national economic interest at the time."

As for the way in which a referendum would operate, Mr Brown said that once the terms had become clear, there would be a Cabinet recommendation to the Commons, followed by legislation and a trigger referendum.

The policy would be included in the election referendum and, as with the Conservatives, ministers who dissented from the Cabinet line at the time, would have to resign or toe the line in public.

The fact that Mr Brown is the most gung-ho member of the Shadow Cabinet in favour of a single currency should help the party's pro-Europeans accept the change for what it is - and not as a signal of increased Euro-scepticism.

But in the immediate future, it would appear that both government and opposition front benches are unwilling to accede to the growing backbench demand for a full-scale debate on the single currency - as demanded by the all-party European Legislation Committee - for fear that it would expose the rifts in both parties.

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