Brown: No early referendum but we are 'pro-euro realists'

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Gordon Brown ruled out an early referendum on the single currency last night as he promised a "considered and cautious" approach to the most crucial issue facing the Government in its second term.

The Chancellor sought to dampen speculation in the City that Tony Blair would seek early membership of the euro on the back of his general election landslide.Mr Brown's Mansion House speech was cleared in advance with Mr Blair and Jack Straw, the Foreign Secretary. The Chancellor's tone was pro-European and he spelt out the potential benefits of euro membership, which he has been reluctant to do in the past.

A delay on the referendum would allow the Government to focus on its much-promised reforms to public services, the centrepiece of the Queen's Speech earlier yesterday, which outlined the Government's programme for the first session of the new Parliament. Mr Blair vowed to press ahead with plans to shake-up health, education, the police and courts as he warned that vested interests who opposed change would not stand in his way.

Mr Brown's caution on timing prompted speculation that Labour might not call a referendum on the single currency before the general election. Mr Blair's allies hinted that the Prime Minister would call a referendum if the Treasury's five tests were met and he believed that the vote could be won. However, Mr Brown's remarks suggested that a referendum might be delayed until 2003.

The Chancellor's new position statement is designed to keep a firm lid on speculation about the Government's intentions until the Treasury completes its assessment of the five tests within the next two years. It is also meant to give a firm guidelines to all ministers to prevent any damaging public differences of emphasis

"Our approach is, and will continue to be, considered and cautious ­ one of pro-euro realism. Pro-euro because, as we said in 1997, we believe that ­ in principle ­ membership of the euro can bring benefits to Britain. Realist because to shortcut or fudge the assessment, and to join in the wrong way or on the wrong basis without rigorously ensuring the tests are met, would not be in the national economic interest," Mr Brown said.

Mr Brown, often seen as a sceptic over European integration, insisted that being part of Europe was "a great cause" and that the Government and business should together put the case for Europe. But he warned the European Union that it had to reform itself, and that Britain should be leading the debate.

With the Tories embroiled in their leadership election, the main opposition the programme outlined in the Queen's Speech may come from within his own ranks. Trade unions and Labour MPs warned yesterday that he would have a fight on his hands over his controversial plan to extend the role of the private sector in the running of public services. But Mr Blair told the Commons: "The British people have given us our mandate. We know exactly what they demand from us and we fully intend to deliver."

The Prime Minister said: "This election marked Britain's desire to move beyond Thatcherism." He believed the British people "decisively rejected the narrow nationalism and monomania of the Conservative Party on Europe."

Some 20 Bills were included in the Queen's Speech and four in draft. But there was no mention of Labour's pledge to repeal Section 28, blocked by the House of Lords in the last Parliament. There were also signs that the Government is backtracking over is plan to bring back its Hunting Bill. Instead, the Commons and Lords may vote on the same day on whether hunting should be banned. Other controversial measures include scrapping the "double jeopardy" in order to allow people to be tried twice if new evidence comes to light and allowing the courts to know the previous convictions of an accused person in some circumstances and bigger curbs on the right to trial by jury than Labour proposed in the last Parliament.

In the Commons, Mr Blair paid tribute to William Hague, who was making his last big set piece speech as Leader of the Opposition. He said: "Whatever disagreements we may have had, he's been a formidable adversary in this House."