Major makes pledge on referendum

Rift with Chancellor is healed

DONALD MACINTYRE

Political Editor

The Cabinet will today agree a formal promise not to enter a single currency in the next Parliament without a referendum after a potentially explosive split over the issue was resolved by John Major and the Chancellor, Kenneth Clarke.

Mr Clarke yesterday finally gave his assent to an agreement under which the Cabinet would make it clear that any decision to join a single currency would be put to the British people in a referendum.

The deal reached between the Prime Minister and the Chancellor left ministers confident last night that today's discussion of the issue would easily reach agreement on what is regarded by several as an essential means of uniting the party in the run-up to the general election.

Downing Street resolutely refused last night even to confirm that the issue would be discussed today, let alone that a deal had been reached. But under the agreement the Cabinet will make it clear that unlike in the 1975 referendum on EEC membership called by Harold Wilson, the Cabinet will be forced to accept collective responsibility.

That means that senior Euro-sceptic ministers would have to resign from the Cabinet if they wanted the freedom to campaign for a "no" vote in a referendum. In 1975 ministers were given licence by the then Labour Prime Minister to campaign according to their personal opinion.

John Major last night sent out a Foreign Office paper detailing options on how a referendum could be called in the event of a Cabinet decision in favour of a single currency.

Senior Cabinet ministers - including Mr Major, Michael Heseltine, the Deputy Prime Minister, Malcolm Rifkind, the Foreign Secretary, and Mr Clarke, - who is strongly opposed to such a pledge - were in close contact amid continuing efforts to reach a deal.

Mr Rifkind was among those strongly pressing for a decision at today's Cabinet and during intensive talks yesterday Mr Clarke is understood to have been assured by Mr Major that he would continue to leave open the question of British EMU membership in the next Parliament. It is also expected to be made clear that the referendum pledge is only intended to apply in the next Parliament and not to bind the Conservative Party for what could be different circumstances after another election.

Mr Clarke, with some backing from Mr Heseltine, was worried that the move was one of a continuing series of concessions to Euro-sceptics which might well not end with a referendum pledge. Such fears have been increased by evident worries among some Tory strategists about the electoral threat posed by Sir James Goldsmith's Referendum Party.

But Mr Major is understood to have made clear in a number of conversations with the Chancellor that the move was not part of a process which would threaten the carefully agreed truce on Europe agreed between both wings of the party. Efforts are also expected to be made by Downing Street to ensure that Mr Clarke is not seen as having suffered a blow to his prestige by having overcome his opposition to a referendum.

Gordon Brown, the shadow Chancellor, said last night as reports of the deal began to circulate in Westminster: "This is one more example of the Prime Minister caving in to pressure. everyone knows this decision has nothing to do with the interests of the country and everything to do with holding together a divided and disintegrating party."

One possibility which had been canvassed among some ministers was for a formula which would closely follow Labour's terms by saying that the Government would seek popular assent for any decision to join a single currency either through a general election or a referendum. But today's statement is likely to make clear that any decision to join a single currency would be followed by a referendum

John Redwood, the leading Tory Euro-sceptic, said last night he would be "quite satisfied" with a stipulation that Cabinet ministers opposed to the single currency would have to resign in order to campaign for a "no" vote in a referendum.