Mandelson uses euro to stage return

PETER MANDELSON will this week return to the political centre stage urging British membership of the euro, calling for far-reaching internal reform of the European Union and slapping down Old Labour.

While Mr Mandelson's friends insisted yesterday it was not an attempt at a comeback, the former trade secretary will clearly be adopting his highest profile since he resigned from the Cabinet last Christmas.

In contrast to the Prime Minister's caution on the issue recently, Mr Mandelson will use a speech in Brussels today to call for greater EU integration and declare that the UK should join the currency when economic conditions are right.

Arguably the most important speech since his resignation, however, will come on Wednesday in Jersey at the annual conference of the AEEU engineering union, one of Labour's biggest financial backers and its most loyal union affiliate.

It will be his first major address on a public platform since he resigned from the Cabinet after failing to disclose his loan from Geoffrey Robinson, the-then Paymaster General.

Apart from reinvigorating his own career, the speech to the AEEU will also be seen as part of a campaign to persuade the Prime Minister to attend next month's launch of the Britain in Europe campaign, led by Lord Marshall of Knightsbridge, chairman of British Airways, who is also attending the conference.

Sources close to Mr Mandelson point out that today's address was organised four months ago and is not part of a re-emergence into the limelight. But since Labour's disastrous euro-election performance earlier this month, speculation has mounted about a role for him, either in a new post as party "chairman", as a European policy supremo, or in the familiar position of campaigns co-ordinator. Ulster Unionists have even talked of him as a new Secretary of State for Northern Ireland.

In today's address to a think tank in Brussels, Mr Mandelson plans to praise the launch of the euro. Drafts of the speech, to be delivered to the Centre for European Reform, argue that the economic strength and job- creating capacity of Europe depend on integration. "The single market and the euro are the right responses to today's world and Britain should join the currency in the right economic conditions," it says. He also argues that the Union should be reformed to make it more "open, efficient and accountable".

The address sets a different tone from that outlined by the Prime Minister in his first reaction since the European elections. Mr Blair said it would be "daft" to join the euro now, before Britain has achieved convergence with the European economies.

Mr Mandelson - invited to the AEEU meeting by Sir Ken Jackson, the pro- European general secretary of the union - will take the opportunity on Wednesday to slap down John Monks,the TUC leader, due to speak to delegates today.

Mr Monks believes that Mr Blair and New Labour are ignoring loyal party supporters which led to a slump in Labour's "core vote" during the recent European elections.

Mr Mandelson will emphasise that Labour needs the votes of both its traditional blue collar voter and of the middle class.