Blair Fails To Cover Cracks on Euro

Euro support takes heavy blow, yet ministers call for Blair's leadership on euro debate.

The Cabinet's cracks over its "prepare and decide" policy on the euro continue to wreak havoc for Prime Minister Tony Blair. Feeling victorious after the latest EU summit in Portugal, he is eager to highlight the Government's successes. Mr. Blair succeeded in finding a compromise over the controversial EU-wide withholding tax. Yet Mr. Blair's disastrous speech to the Women's Institute, and Cabinet rifts over the single currency are overshadowing the Government's achievements.

Tony Blair's attempts to present a united image are failing. The Cabinet split, although officially denied, refuses to wither. Pro-euro Cabinet ministers, backed by Europhile organisations, want the government to take a lead on the single currency. Foreign Secretary Robin Cook, Trade and Industry Secretary Stephen Byers and Peter Mandelson, the Northern Ireland Secretary, are pushing for early entry into the single currency.

The trio would like the Government to consider whether the UK economy meets the Treasury's five economic tests, now rather than later. Nick Clegg, Liberal Democrat MEP for the East Midlands, accuses the Government of "ducking the issue" with its five "flimsy" tests.

The prime minister, speaking to business leaders, has insisted that the Government has not changed its position. He said: "In principle we favour joining a successful single currency. In practice the five tests, which include sustainable economic convergence and the effect on the city of London, must be met." Mr. Blair's declaration that he will make the UK "Europe's corporate HQ" were dismissed by shadow chancellor Michael Portillo.

Mr. Portillo accused the government of taxing share options, driving away IT consultants, raising taxes on multi-nationals, attacking centres of excellence and of increasing regulation on business. Mr. Portillo believes that Tony Blair is losing the support of the business community.

The split has therefore emerged at a bad time for the prime minister. Mr. Blair and the Chancellor of the Exchequer, Gordon Brown, are eager to avoid the issue. A recent ICM poll in May for The Guardian perhaps shows why. Opposition to the single currency continues to be strong. The survey revealed that more than 60% of the public are against the euro. Conservative East Midlands MEP Roger Helmer highlighted the reason for the government's reluctance in January. "Blair is too clever a politician to fight a referendum that he'll lose," he argued.

These figures are blamed on the on a lack of Government leadership in the pro-euro campaign. The Government is so wary of the issue that Gordon Brown, deleted sections of a recent speech to parliament by Robin Cook. The speech was seen as being to outspoken on the single currency. It is seen as a further setback for the euro-enthusiasts.

In February Britain in Europe (BiE), which was established with the prime minister's backing, fell flat on its face. BiE claims that 8 million jobs would be lost if Britain left the European Union were dismissed as misleading. The claims followed a report, commissioned by Britain in Europe, written by the National Institute of Economic and Social Research (NIESR). It examined the possible effects of the UK staying out of the single currency.

Martin Weale, Director of NIESR called BiE's suggestions "absurd." Business For Sterling's head of research Dominic Cummings said: "Britain in Europe have been pedalling scare stories for months, but this is the worst example yet. Their scare story was a deliberate attempt to distract attention from the real issue of the euro and the failure of the Government's National Changeover Plan. It has backfired spectacularly".

NIESR argued that BiE had completely misrepresented the findings of the report. An ICM poll also revealed that 87% of the business community reject government advice that they should prepare for the euro. Instead the introduction of e-commerce appeared as a more immediate business issue.

Nigel Farage MEP, leader of the United Kingdom Independence Party (UKIP), also rejected BiE's arguments. The UKIP supports the UK's complete withdrawal from the EU. "Britain would be better off financially to the tune of £1.2m an hour," Mr. Farage insisted.

In contrast the Eurosceptic campaign is far more pro-active. The Conservatives with their "Save The Pound" campaign, which began on 10th June, are hoping to lead the Eurosceptics. As a result the chairman of the Democracy Movement, multi-millionaire businessman Paul Sykes, has resigned and renewed his support for the Conservative Party.

Mr. Sykes is attracted by the Tories' promise to make the euro a General Election issue next year. Meanwhile, Michael Portillo accused the chancellor of "attempting the impossible," by suppressing the euro debate. He claimed that the government can no longer avoid the issue of the single currency.

The Tories would like to take full advantage of the Government's predicament. Nick Clegg MEP - a Liberal Democrat supporter of Britain in Europe, believes that there's little policy difference between New Labour and the Conservatives. He argued that both policies were "unsatisfactory in their own ways. " Mr. Clegg's harshest words were kept for the Tories. He accused them of "turning their backs on history." He also said that the Conservatives had also lost a sense of reality, and would risk endangering British jobs with their more Eurosceptic line.

Political commentators, however, point out though that the Conservatives haven't ruled out scrapping the pound completely. So what's the main difference? In its 1997 General Election manifesto it promised a referendum on the single currency 'in the lifetime of the next parliament.' The Conservative's policy, backed by a high proportion of its membership, pledges to rule out the single currency for a period of ten years.

The Government also faces criticism over its National Changeover Plan. It is accused of using taxpayers' money without a real mandate. However, Nick Clegg and others like him, describe the Government's "Get ready for the euro" campaign as "laudable."

Tony Blair isn't the only one with cracks in his party line. Even though the Conservatives are now neck to neck in the opinion polls, Mr. Hague also faces internal divisions. Former Deputy Prime Minister Michael Heseltine MP, Bill Newton Dunn East Midlands MEP, and the former Chancellor of the Exchequer, Kenneth Clarke, reject their leadership's stance.

The Tory rebels continue to endorse Britain in Europe's campaign, support the Government's more pro-euro line, and criticise their own leadership. Mr. Hague still lags behind Blair in the latest polls. So Europe remains for both parties, as divisive as it was for Mrs. Thatcher's and John Major's Governments.

Cabinet At "Civil War" While Opposition to Euro Hits High