Blair's equivocation on the euro may not be noble, but it is wise

Mr Blair swats away Mr Hague by invoking Tory policy which pleases neither pro- nor anti-Euro wings

THE CONSERVATIVE Party's membership drive stumbled this week. The leadership decided that the time had come to expel two of its more distinguished members in the name of loyalty to the cause. These were not crazed right-wing reactionaries, the equivalent to Labour' assault on Militant Tendency, but a former Cabinet minister and someone who was, until recently a senior MP.

Neither Lord Gilmour nor Sir Julian Critchley is an important political player. Both are well to the left of the leadership and have, no doubt, been regarded as a pain in the neck for many years. But the significance of their departure goes beyond the immediate reaction of most voters which is probably "Who are they... and who cares?" For their expulsion sends out a wider message, which is that the Tory party not only is no longer a broad church, but does not want to be one either.

Much more than Labour in the early 1980s, it is marching determinedly to a narrow section of the political stage. At least Michael Foot, during his traumatic leadership, tried to persuade Owens, Williams and co to stay on board before they left. William Hague has sent Gilmour and Critchley packing without a moment's hesitation. They did not want to leave. He told them to.

For opposition parties, unable to be tested by the implementation of their policies, symbolism is extremely important. This symbolic gesture tells voters that the party is only interested in those who share its hostility to Europe. Pro-European Tories need no longer knock at its door. They can look elsewhere.

The Tory leadership has over-reacted to its success in the European elections in a way which will rebound against the party in the months to come. The expulsions are only one such example. Another was the meeting this week of the parliamentary party to discuss whether or not to sever ties with other centre-right parties in the European Parliament. One of the demoralised band of pro-European Tory MPs told me: "It was awful. The worst parliamentary meeting I have ever attended." Only Kenneth Clarke spoke out against the passionate, self-confident calls for the formal links to be broken.

But behind the bravado of the Tory Euro-sceptics lurks a real doubt. Privately, many of them do not believe they have a credible policy on the Euro. Most of them would prefer a commitment to rule it out forever. They are worried that the current policy, which Hague has no intention of changing, and would have problems doing so as it was confirmed by a ballot of party members, is not credible.

Up until the end of the next parliament they are licensed to warn about the horrors of the Euro. But when the golden, cathartic period has come to an end, the Tory policy is to reconsider.

They are right to be worried. It gives the evasive Tony Blair a get-out clause which he deploys at every opportunity and will be able to do so in an election campaign. Whenever Hague attacks him, as he does with some effect at Prime Minister's Question Time, Blair can swat him away by invoking the Tory policy which neither pleases fully its pro-European nor its Euro-sceptic wing.

In my view the high politics of the Tory party and the Euro will not greatly change between now and the election. Indeed, it will not change until a referendum is eventually held. Those who have had apocalyptic visions of the Euro being the catalyst for a dramatic realignment in politics will be proved wrong. The Pro-Europeans in the party will occasionally raise their head above the parapet, but without making waves. Sceptics will whisper privately that they wished they had an even stronger anti- Euro policy, but to no avail. Hague will portray himself as the saviour of the pound, but for only one parliament.

What of the Government's position? In spite of recent reports to the contrary, it has not changed since Blair announced the changeover plan earlier this year. At the time it was heralded by pro-Europeans as the moment he had crossed the Rubicon. In their excitement they failed to notice that he had added another condition before Britain signed up.

It was in this statement that Blair declared that it was essential for other EU countries to adopt the flexible labour markets which are central to New Labour's economic creed. During his leadership, Harold Wilson changed his mind four times on whether Britain should join the Common Market. The equally pragmatic Blair is being cleverer. He is keeping the option of joining the Euro, and the option of not joining, in the air at the same time.

It is an easy position to mock and I have called on him to take a stronger line many times. But given the symbolic hardening of the Tory position, the persistent hostility of the media and the erratic early performance of the Euro, I have also come to accept that his Wilsonian pragmatism is the only practical option available to him.

For unless he has had a cowardly change of heart in the wake of the Euro results, I take Blair's "wait and see" position to be very different from the one that Thatcher adopted over the ERM or the one held by Major in the run-up to the last election. On entry to the ERM , Lawson and Howe had to "wait and see" until they could persuade Thatcher to join. They failed to persuade her. In the end Major, as Chancellor, convinced her to join, at the wrong time and the wrong rate. Economics had nothing to do with the timing of the decision. As for the Euro, Major only promised to wait and see to keep his chancellor on board.

Blair and Brown are different. I still believe that they want to join the Euro. Indeed, though Clarke and Heseltine berate Blair, their policy is precisely the same: to sign up when economic conditions permit. Neither Clarke nor Heseltine is calling for entry now.

So gripped have we become by the changing high politics of the Euro we have tended to ignore the economics. But after the European elections the politicians have decided on their roles and they are unlikely to surprise us again in the near future. Hague will play his fatally flawed ace, Blair will equivocate, the various pro-European campaigns will, I fear, continue to perform in their lacklustre, chaotic way.

But while the politics are on hold, the economics will start to change. The two most likely economic scenarios will both make the Euro more attractive. Either the pound will continue to soar, strangling manufacturing industry in its wake. Alternatively, a stronger Euro will move much closer to the level of the pound, making entry practical and much easier to advocate. For hardly the most noble two reasons - caution and deference to focus groups - the Government has stumbled across the right policy. Economics rather than high politics will determine when Britain joins the single currency.

Steve Richards is Political Editor of the `New Statesman'