Blair announces sterling could disappear in three years after referendum


The belief that the British government intends to join the euro soon after the next election hardened last night, as the Prime Minister confirmed sterling could disappear within three years of a successful referendum on the issue.

Announcing the government's "national changeover plan" as a basis for consultation, Mr Blair told MPs that the UK could move to membership of the single currency considerably faster than the 11 first-wave states.

But denying the Conservative Party leader's charge that he was seeking to "bounce" the British public into a decision he did not have "the guts" to announce, Mr Blair insisted: "What we have announced is not a change of policy. It is a change of gear. If we wish to have the option of joining we must prepare."

Mr Blair said: "Our intention is clear. Britain should join a successful single currency, provided the economic conditions are met. It is conditional. It is not inevitable. Both intention and conditions are genuine."

Later the Chancellor, Mr Gordon Brown, said he expected the government to decide on whether to recommend membership soon after the next general election, due in 2001 or 2002. Under the changeover plan, a decision taken in 2001 to move to the euro would lead to the abolition of sterling by 2004.

A move by sterling into the single currency would be good news for Ireland, as it would remove a potential source of difficulty for the economy which might be caused by swings in the British currency's value against the euro.

Yesterday the Conservative leader, Mr William Hague, said Mr Blair had committed the country to an "unnecessary, expensive and time-consuming" course of action for which voters had never given their consent.

Telling Mr Blair "It is your love of the euro which dare not speak its name," Mr Hague said: "You say it is not inevitable, but this whole process is designed to make it inevitable, with the changeover of cash registers, computers and banking systems. You pretend to give people choice while steadily denying and diminishing that choice, lulling people into thinking that a people who decided their destiny for 1,000 years are no longer fit to do so."

The Prime Minister announced the government would be bringing forward legislation to provide funds to make government computer systems euro-compliant. Assuming the government's five economic tests are met, and a Yes vote in the referendum, the plan says euro coins and notes could be in circulation within 24 to 30 months.

Mr Hague said of Mr Blair: "What he's doing is trying to create the sense that it's inevitable by spending taxpayers' money. The government spends taxpayers' money and encourages businesses to spend money without setting out the benefits.

"Then they come along in two or three years' time and say, `Look, all this money has been spent, we're a long way down the track, we might as well do it'."

He continued: "If he's so enthusiastic about it . . . then he should show some leadership and stand up and ask the British people to support what he wants. But he hasn't got the guts to do that."

From the opposite side of the argument Mr Paddy Ashdown, the Liberal Democrats leader, criticised Mr Blair's government for providing "leadership by stealth, leadership by subterfuge."