Blair gives Hague an ace card

The issue that has shaken the government in recent days will not trouble it greatly at the next election. The NHS has always worked in Labour's favour, even during its dark days in the 1980s. Now that voters, and the Conservative newspapers, are screaming for a Labour government to spend more, rather than cut taxes, our pragmatic ministers will oblige.

Even if huge improvements are not in place in 18 months' time (and I doubt if they will be), the government will be given the benefit of the doubt, as were the Conservatives over the issue of taxation. Although the tax burden rose under the Thatcher/Major administrations, voters still supported them as a tax-cutting party. Now Labour has secured its own double whammy. The political terrain has shifted away from tax cuts to public spending, just at a time when voters, on the whole, trust Labour to spend their money wisely. This is not the moment to guarantee a reduction in the burden of taxation, as the Conservatives have done.

As Tony Bevins pointed out in his perceptive article in the New Statesman last week, Blair will be able to detonate a "spending bombshell" that will be at least as destructive for the Tories as the "tax bombshell" that helped to blow Labour apart in 1992. William Hague's "tax guarantee" will cause him much more difficulty than his pledge to stay out of the single currency in the next parliament.

It is the government that has more cause to worry about the euro.

While ministers can relax - from an electoral point of view - about the NHS, they have every right to be alarmed about how they are approaching the single currency in the run-up to the election and beyond. They could end up in a desperate mess. On the surface all is well. Under Labour, Britain will enter the euro when the economic conditions have been met. The Conservatives have ruled out entry, even if it proves to be in the country's economic interest. Bingo!

In fact, the government's policy is already starting to look wobbly. As Tony Blair said in his BBC interview on Sunday 16 January: "Whatever I say on this will be misinterpreted one way or the other, but I can assure you the policy hasn't changed." Sure enough some newspapers read his comments as tilting towards the sceptical, while one thought he was more positive.

Robin Cook has had a similar experience recently, having been written up by one newspaper as going cold on the euro and then getting hot again within the space of 48 hours.

Gordon Brown has not said anything about the euro lately. He has become the Bob Dylan of the cabinet, much more interesting and intriguing now that he rarely speaks. But his silence is open to many interpretations as well. Has the Chancellor become much less keen on Britain entering the single currency? Many observers, although I meet no one who is entirely sure, have concluded that the answer is "Yes" .

Some of the reporting is mischief- making. The newspapers are not exactly neutral onlookers. But there is a genuine difference of emphasis between Blair, Cook and Brown which is potentially significant. Blair and Cook continue to say - Blair said it again last weekend - that they "anticipate a referendum" early in the next parliament. Brown stresses that the government will review the economic conditions early in the second term. At this point he does not leap so willingly on to the next stage, which is to anticipate a subsequent referendum. After all, Brown implies, the review may conclude that it is not in Britain's economic interests that Britain should join, in which case there would be no referendum.

For political reasons, I believe that this is an increasingly likely outcome of an early review. In spite of the occasional courageous forays by Blair, Cook and Stephen Byers at the Department of Trade and Industry, public opinion will not be ready if the debate remains so one-sided up until the election. At present, opinion is drifting against joining the euro, with 63 per cent opposed, according to the latest ICM poll in the Guardian, up from 59 per cent in November.

Possibly the government would promise to review the situation annually, which is what Peter Mandelson urged when ministers decided to kick the whole issue into the land of milk and honey called the second term in November 1997. I suggested at the time that the terrain would not look quite so comforting when it moved closer into view.

But there is still the hurdle of the election itself. I do not see that the government's studied neutrality can survive a question which will be asked repeatedly during the election campaign: "Is Britain moving nearer to meeting the economic conditions laid out by Brown in November 1997?" Ministers cannot reply: "We'll tell you after the election." Yet merely referring back to the Chancellor's statement made in November 1997, as if nothing had happened to the economy in Britain and the rest of Europe since, is not credible either.

Out of these mists, Hague has an ace card, although he shows no sign of playing it. If he had a more acute strategic sense, he would not argue that Labour is trying to bounce people into the euro. As the highest of high-profile referendums is promised, that is obviously not the case. Britain is not going to join the euro while Rupert Murdoch is looking the other way.

But Hague could contrast, credibly, the Tories' clarity (however misguided) with the uncertainty offered by Labour: a second term under Labour would mean destabilising confusion over the euro, rather than certain entry. What is more, unless ministers have the courage to flesh out their wait-and-see policy, he would be right.

This article first appeared in the 24 January 2000 issue of the New Statesman, The New Statesman Essay - The tyranny of the brands