Chapter of insults by Major and Blair

European rights spark early outbreak of election fever. John Rentoul and Colin Brown report

John Major and Tony Blair clashed in election-campaign style yesterday, as they furiously denounced each other's view of the European Social Chapter in speeches to business audiences in rival tours of the Midlands.

Resorting to unusually strong language, the Prime Minister condemned Labour's promise to end Britain's opt-out from the Social Chapter of the Maastricht Treaty, which he negotiated, as "immoral".

He warned the Midlands Institute of Directors in Birmingham: "We mustn't look just at what's in the Social Chapter now, but what it could be used for in future ... The fact is no one knows precisely what the European Commission might or might not propose under the Social Chapter, or how the European Court might interpret it."

Mr Major described it as a "European Jobs Tax", and said: "That's why, if I'd signed the Social Chapter, I could never have looked the unemployed in the eye again."

Once again, the Prime Minister laid claim to the "One Nation" title which is under siege both from Mr Blair on the left and Baroness Thatcher on the right. "Enterprise offers opportunity for the whole nation; one nation, undivided and whole," he said. "You cannot build such a nation on warm words and soft policies."

The Labour leader responded by comparing the Government to a "busted flush". He said: "It's not governing any more. It's drifting. So ... they have to attack the Labour party and attack it in exaggerated, violent and ludicrous tones. Mr Blair went on to say that under the principles of the Social Chapter, only two pieces of legislation had been proposed; one on greater rights of consultation for employees, and the other concerning parental leave. "There is no proposal anywhere in the social chapter to increase taxes. It is an absolutely absurd piece of Conservative propaganda.

"Every single other Conservative party in Europe is in favour of the social chapter," he told BBC Radio 4's The World At One.

Earlier, Mr Blair, speaking to a business breakfast at the Nottingham Chamber of Commerce, poured scorn on the Government's surprise decision to publish a white paper setting out its position on the Maastricht Treaty revision talks, which start at the end of March.

"Every move the government now makes is decided by the internal struggle in the Tory party," he said. "This is a further concession to the right. Not so much a white paper as a white flag ... No one expects the white paper to make the Government's position any clearer. They are incapable of a clear position because the divisions within their ranks run too deep."

After answering questions for over an hour, Mr Blair said they had omitted to raise the issue normally mentioned at such events: "We have heard about New Labour but has it really changed?" Mr Blair assured them it had; there would be no turning back the clock to the pre-Thatcher era. Mr Blair's text repeatedly referred to "co-operation and partnership" in his stakeholder world of the future.

He wanted businessmen to trust that a Labour government would not seek punitive taxes, and that the minimum wage would not destroy jobs.

But reactions suggested that Mr Blair may find the message harder to sell to businessmen than to the party faithful.

Bob Stoker, materials and quality manager for Imperial Tobacco, said: "He comes across certainly as very sincere, honest and open, but the question ... is can he keep Labour totally under his control? ... Once he gets into Government, he may have to bow to others."

The Labour leader was very eloquent, said Simon Bold of the chartered accountants Pannell Kerr Forster. "He believes in what he says, but what about the people on his left wing?"

Not all of the Blair message fell on stony ground. Mr Stoker said: "If the stakeholder economy is about the workforce, about working together, then I am totally in favour."