The Sterling Crisis: Gould may be forced to quit over Maastricht: Shadow cabinet discord

BRYAN GOULD, Labour's National Heritage spokesman, could be forced to resign from the Shadow Cabinet next week over the Maastricht treaty.

If the French vote yes in Sunday's referendum, and the leader John Smith continues to pledge Labour support for the treaty, Mr Gould would have little option but to resign because to do otherwise would breach the normal collective responsibility of the Shadow Cabinet.

Mr Gould has told colleagues he would find it 'very difficult' to follow the Shadow Cabinet line, given the strength of his views. But he has stressed that he is not seeking resignation and believes an accomodation can be found.

With others in the Shadow Cabinet, including some who have not broken ranks publicly, arguing that Labour must now consider voting against Maastricht, one Shadow Cabinet member predicted 'a fair old fudge' when the party leadership decides its line next week.

Yesterday Mr Gould said that 'apologists for our membershiop of the ERM at an overvalued rate now owe a massive apology to all those who lost their jobs, homes and businesses'. That remark encompassed Mr Smith and Gordon Brown, Labour's shadow Chancellor, who have consistently refused to argue the pound was over-valued, as much as the Government.

But Mr Gould added: 'My whole argument is that the futile attempt to pin ourselves to an over-valued exchange rate has actually been harmful to the European economy, and so would equally our acceptance of the Maastricht treaty. That would be the wrong blueprint for the future of Europe.' Maastricht, he said, 'should be abandoned', Labour should oppose the treaty, and a new European agenda should be drawn up.

Mr Gould has told colleagues he knew he had been 'pushing his luck' with his public demands - against the Labour leadership line - for a lower pound and against Maastricht. He has acknowledged that Mr Smith has been 'commendably tolerant', adding it had been 'a welcome change from the style of the Kinnock leadership'. But having remained silent on his economic views in the run-up to the last election in the interests of party unity, he told the Evening Standard yesterday: 'That was the judgement I took then and I will have to take a similar judgement no doubt on this issue, but I don't know what that will be. All I can tell you is that resignation is not on my mind.'

He insisted yesterday that the differences 'such as they are, are easily bridged and events in any case are bringing their own solutions'.

On economics, the Government's devaluation of sterling and suspension of ERM membership has made the differences between Mr Gould and Mr Smith easily resolved, at least for the present. And a no vote in the French referendum would get both off the hook - while being in Mr Smith's view the wrong result.

Labour's leadership is holding its breath for tomorrow's vote - a yes being set to create similar party discipline problems for Mr Smith to those John Major faces.

Shadow Cabinet members acknowledge privately that opposition to the treaty and demands for a referendum have risen sharply on the back benches and Peter Hain, secretary of the Tribune group of MPs, said the feeling was growing that 'we have to vote against'. MPs were arguing that the increased possibility of defeating the Government 'must take precedence over everything else'. Labour's leadership, however, is determined not to lose its hard-won European credentials, with supporters of the shadow Chancellor arguing that the way he and Mr Smith held their nerve over calls for Labour to back devaluation had won it long-term gains - with the Conservatives unable to again level the jibe that Labour is the party of devaluation.

Dennis Skinner, MP for Bolsover, is tabling a call for 'permanent' withdrawal from the ERM for next Wednesday's national executive, saying 'to go back now would be like a dog returning to its vomit'.