Heath returns fire against Euro-sceptics

The currency battle: Opponents seize on hint by Rifkind that Britain would reject any fudge over terms of monetary union

Tory Euro-sceptics yesterday showed no let-up at fringe meetings in their demands for entry to a single currency to be ruled out, despite John Major's appeal for unity.

They in turn came under attack from Sir Edward Heath, the former Prime Minister, who said there would be no change of government policy, and the Euro-sceptics would continue to cause trouble until the election. "They can't possibly change that, so the divisions with these people will remain."

His warning exposed the temporary nature of the unity on Europe shown between Mr Major and Baroness Thatcher 24 hours earlier.

Euro-sceptics heckled Sir Leon Brittan, the European Commissioner, one of the few voices on the Tory fringe calling for Britain to preserve its right to enter a single currency. He warned the Euro-sceptics that unless they united behind Mr Major, "we are dooming ourselves to defeat".

But the Euro-sceptics' anger could be subdued by the emergence of what they believe is a workable compromise.

They focused on a section of Malcolm Rifkind's speech which they claimed had opened the way for entry into a single currency to be ruled out early next year, despite Mr Major's protestations that there would be no change in policy.

The Foreign Secretary reinforced assurances by the Prime Minister that the Government will not join a single European currency if there is a "fudge" over the convergence criteria. "We need to ensure that the economic convergence criteria are not fudged because it would cause economic instability across Europe," he said.

John Redwood, the former minister campaigning against the single currency, said: "It marks an important new development for our European currency policy. The British Government now has an opinion - that pushing monetary union would be damaging. The only currency union on offer is a fudged one. We can all agree on that."

Another leading Euro-sceptic, Norman Lamont, the former Chancellor, told a fringe meeting: "There is no prospect of a Conservative government joining a single currency in the first wave. That is apparent to anyone at this conference."

The Euro-sceptics believe Germany and France will fudge the criteria requiring national debt to be reduced, enabling the Government to reject the single currency before the election. "The Cabinet has already made the decision," one MP said "It's just a question of timing. It won't happen before the Dublin summit in December."

Mr Rifkind's carefully crafted speech won one of the longest standing ovations of the conference and enhanced his long-term chances for the leadership. He skillfully appealed for unity behind the policy preserving Britain's right to opt in or out of a single currency with a referendum.

But in a clever balancing act, the Foreign Secretary showed his sympathies with the Euro-sceptics. A single currency may never happen, he said. British interests would be seriously damaged by taking premature decisions but he assured the Euro-sceptics: "Be patient. Neither the national interest nor the party interest require us to ride roughshod over views deeply and sincerely held."

Peter Lilley, Secretary of State for Social Security, called for unity on Europe. "I am sick and tired of Conservatives who fuel the media by sniping at their colleagues," he said.