Euro is Blair and Brown's largest battleground

The Blair government is contriving to make itself look embattled on the euro, writes Frank Millar , London Editor

The Blair government is contriving to make itself look embattled on the euro, writes Frank Millar, London Editor

Could the question of Britain's relationship with Europe do for Tony Blair and New Labour what it did to John Major and the Conservatives?

It would seem absurd even to raise the question. That said, the Blair government is contriving to make itself look somewhat embattled on the question of the euro, the emerging European constitution and the leadership role at the heart of the EU which the Prime Minister has long declared Britain's destiny.

There is no obvious comparison between Mr Blair's position and that of the hapless Mr Major as he battled to preserve his government's European credentials against his own increasingly sceptical MPs in the dying days of the last parliament.

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Mr Blair has already secured his place in history by winning Labour an unprecedented second full term in office. The general consensus is that he probably has a third election victory already in the bag.

New Labour's quest for electability involved junking wholesale the left-wing dogma which had Michael Foot's 1983 manifesto branded the longest suicide note in history.

Along with the rest of the baggage went the Old Labour talk of withdrawing from what was then still known as the Common Market.

As the Tories tore themselves apart over the Maastricht Treaty and then the euro, Mr Blair refashioned a Labour Party of proud Europeans. Recall the relish with which he anticipated the Conservative expulsion from power and his own arrival in the inner sanctums of the European Union and the contempt with which he compared Mr Major's position to his own.

"I lead - he follows" was the taunt routinely thrown across the dispatch box as Mr Blair assured the British public how very different things would be once he arrived in No 10.

Six years on, however, things don't seem very different at all. True, the Blair government retains its "in principle" commitment to joining the euro once it passes Gordon Brown's famous five tests and is adjudged in the national economic interest.

In that sense, the leader of the Commons, Dr John Reid, probably wasn't attempting to shift the party's policy last week when he suggested it was a question of "when" rather than "if" Britain joined the single currency. On the other hand, the Foreign Secretary, Jack Straw, thought it still a question of if and then possibly when. It would not be the first time Mr Straw got his words mangled, suggesting a government split where there was none at all.

However, the seeming contradiction inevitably fuelled speculation about the rift between Mr Blair and Mr Brown over the terms of the Chancellor's "not yet" verdict now promised for June 9th.

That speculation was compounded by Friday night's joint briefing by Nos 10 and 11 asserting that the two men were not at loggerheads and insisting neither held a dogmatic position on whether a euro referendum might be held before the next general election.

Mr Brown had presumably been enraged by headlines on Friday morning proclaiming a victory for Mr Blair in giving the cabinet a full role in the decision-making process.

The terms of their "unity" declaration thus produced reports 24 hours on suggesting Mr Blair in something of a retreat - for the Prime Minister most definitely wants to keep alive the option of a referendum during the life of this parliament. By Sunday the Chancellor was appearing on Breakfast with Frost reasserting his control and making it plain that the cabinet's "decision" would be "absolutely" based on the assessment of the five economic tests.

It is theoretically possible that the cabinet could reject Mr Brown's judgment, conclude that the British and European economies are closer to convergence than he allows and that anyway, the political imperative is what drives the decision after all.

However, that would be to repudiate the basis of Labour's policy since 1997. Moreover, Mr Blair almost certainly calculates he can neither sack the Chancellor nor have the remotest hope of winning a euro referendum without his backing.

There is the rub for Mr Blair. While pro-euro ministers and influential backbenchers like Mr Peter Mandelson dream of wresting control from Mr Brown, he and they know only too well it is control which the Prime Minister handed his Chancellor in the heady aftermath of their first election triumph six years ago.

Mr Blair could not have guessed then that the euro would provide the largest battleground in their ongoing struggle for dominance, a struggle which now appears to feed into disputes over a swathe of government policies, from tuition fees to foundation hospitals and reform of the public services generally and which is always informed by the unsettled and unsettling question of Mr Brown's determination to secure the succession.

However, there are no prizes for guessing that Mr Blair's problem with his Chancellor and the ongoing hostility of majority opinion across the United Kingdom explains his unwillingness to make the same mistake twice and yield also to demands for a referendum on the emerging constitution for Europe.

Mr Blair can also fairly charge the Tories with opportunism. While in office, they always insisted that referendum was not the way for a parliamentary democracy.

Yet suspicion surely will greet Mr Straw's assertion that the emerging constitution will prove far more "prosaic" than its opponents claim, on the very day Mr Blair met Valéry Giscard d'Estaing to draw "red lines" under continuing British sovereignty over tax and foreign and defence policy.

Indeed it may be only a matter of time before ministers start to emulate their Tory predecessors and insist that they are "winning the argument" in Europe.

As of now, they are nowhere near winning the argument about Europe at home. Moreover, if Mr Blair fails to repel the "federalist" vision, he will be on dangerous ground in denying the people the right to decide.

For its willingness to trust the people - by referendum on everything from Scottish and Welsh devolution to a mayor for Hartlepool - has, at least until now, been one of New Labour's proudest boasts.