Clarke faces tough battle on single currency

DONALD MACINTYRE

John Major will seek today to overcome the objections of his Chancellor Kenneth Clarke and clear the ground for a pre-Easter Cabinet decision to pledge a single currency referendum.

There was cautious optimism among senior ministers last night that tomorrow's Cabinet could ratify a promise not to enter a single currency without a referendum, despite an unexpected threat from the backbencher Julian Critchley to bring the Government down if they did so.

Malcolm Rifkind, the Foreign Secretary, who is urging an early decision to settle the issue once and for all this week, has already submitted to Downing Street his paper detailing the options on how to operate such a referendum.

The Prime Minister is hoping to circulate the paper to the Cabinet for probable discussion on Wednesday, holding out the possibility that the Prime Minister could announce a decision before the Commons rises for Easter later in the day.

A new wild card in the continuing divisions over the referendum came with a dramatic letter to the Times from Mr Critchley, the ailing MP for Aldershot, announcing that he had told the whips he would vote against the Government in a confidence division if it promised a referendum on the single currency. Since, as Mr Critchley pointed out, the Staffordshire South East by-election is likely to leave the Tories with a single vote majority, his threat cannot be dismissed out of hand.

But there were clear hints in Whitehall yesterday that while Michael Heseltine, the Deputy Prime Minister, agrees strongly with Mr Clarke - about the need to halt what pro-Europeans see as a remorseless series of concessions to Euro-sceptics - he could emerge as a mediator between the Chancellor and the referendum pledge supporters, including Mr Major. Mr Heseltine was said to be active behind the scenes in seeking a formula which would satisfy Mr Clarke.

If Mr Clarke were reluctantly to agree to the proposal he would almost certainly demand further guarantees that Mr Major would not rule out a single currency in the next Parliament, and not call for the general election to be fought on a stridently nationalistic platform.

As some senior Cabinet ministers continued to express deep incredulity at the idea that Mr Clarke would push his objections to the point of resignation, one member of the Cabinet said the issue of whether the Euro-sceptics would seek to exploit a referendum by demanding more concessions was an issue not of "principle but tactics".

One minister also dismissed the idea that Euro-sceptic backbenchers would continue to press for further concessions in the face of the electoral threat posed by Sir James Goldsmith's referendum party. "The Goldsmith party won't make any difference to the election, especially if we agree to give this pledge this week," he said.

He also pointed out that the Cabinet was already contemplating a referendum in northern Ireland at at least some stage in the peace process.

Mr Rifkind's paper does not make recommendations but is thought to lean towards the idea of a referendum coming after a Parliamentary decision endorsing a Cabinet decision, although it admits the possibility that the Commons might merely debate the issue after a Cabinet decision, then subsequently enact any decision taken in a referendum.

Mr Clarke's decision not to attend a meeting of Group of Seven finance ministers in Lille yesterday triggered a fresh alarm in Westminster amid fears that he could be prepared to push his opposition to a referendum pledge to the point of resignation.

But Downing Street dismissed suggestions that Mr Clarke had remained in London for emergency talks with Mr Major on the referendum issue, pointing out that the Canadian and US finance ministers had pulled out of the meeting. Mr Clarke has also been heavily involved in the negotiations with Brussels over the hoped-for BSE compensation deal.

News Analysis, page 15

News Analysis, page 15