Neill curbs hit Blair's Euro hopes

TONY BLAIR'S hopes of taking Britain into the single European currency were dealt an unexpected blow last night when his anti-sleaze watchdog proposed strict curbs on the Government's power to campaign for a "yes" vote in a referendum on the euro.

In a wide-ranging report that will revolutionise the way British politics is funded, Lord Neill said the Government should remain neutral in future referendums and not throw its machine behind one side or the other, with both sides receiving equal funding from the state.

The proposals from the Committee on Standards in Public Life went much further. The report gave the Prime Minister a big headache over the referendums on the single European currency and the introduction of proportional representation for House of Commons elections.

The inquiry team was shocked that public money was used to support "yes" votes in the recent referendums in Wales and Scotland, while "no" campaigners, particularly in Wales, operated on a shoestring.

Summaries of government White Papers promoting the assemblies were posted to every household at taxpayers' expense. The committee argued that in future partisan material should not be sent out as "government information". Committee members believe the Government might have lost the referendum on a Welsh assembly, in which it scraped a wafer-thin victory, if its opponents had enjoyed equal funding.

Tory leaders were delighted by the proposal for a "level playing field" during referendums, saying it would boost their chances of defeating any attempt by Mr Blair to take Britain into the single currency. The Tories had feared that there would, in effect, be two "yes" campaigns, one run by pro- Europeans and the other by the government machine. "This is very good news for us and it will be difficult for Mr Blair to ignore Lord Neill's proposal when he tries to join the single currency," a Tory source said last night.

The Prime Minister is expected to call a referendum soon after the general election if Labour retains power.

Ministers may, however, take the controversial step of rejecting Lord Neill's proposal. They believe it would be unthinkable for the Government not to give a lead to voters. Jack Straw, the Home Secretary, told BBC TV's Newsnight programme the Government should not use its power and money unfairly to influence the result of a referendum, but added: "It is unrealistic to expect the Government not to do anything in the referendum given the fact that it is the Government that has initiated the referendum."

Lord Neill told a press conference: "We found there was a long tradition among political parties of concealing the size of any donation they received. As a result of this secrecy there is a suspicion and cynicism among the public."

People believed donations might buy access to ministers, influence on policy, honours or other privileges, he suggested.

While Labour and the Tories welcomed the report, they clashed over how quickly the reforms should be introduced. The Tories accused the Government of delaying the measures so it could "cherry-pick" the report, and called for legislation to be included in the Queen's Speech next month.

Ministers promised new controls over party funding and spending would be in place by the next general election, and attacked the Tories for refusing Labour's offer to implement the main planks of the Neill report in advance of the legislation.

Mr Straw said the Government accepted the "basic thrust" of the report and promised a draft Bill by next summer.

The Neill committee's 100 recommendations include: a pounds 20m limit on general- election campaign spending by each party; disclosure of donations of more than pounds 5,000 nationally and pounds 1,000 locally; and a ban on foreign donations. An independent electoral commission would police the new rules, and transgressors could face heavy fines or imprisonment.