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17 July 2000

Will the Tories harden on the euro?

Hague is under pressure to declare the single currency a constitutional issue and to say he will nev

By Simon Heffer

The Conservative Party has had a good crow over the government’s difficulties with Britain’s entry into the European single currency. Although events have smelt horribly of the decay the Tories themselves suffered under John Major – with senior ministers fighting among themselves and little semblance of a collective policy – most of Hague’s men have viewed developments with quiet satisfaction.

All is not, however, well in Toryland. While the endless arguments have been trotted out over whether or not the euro would mean more Japanese car factories in Britain, the Tories have found themselves fighting with one hand tied behind their back. They are proud, or so they say, of a policy that “unites the party”, but that policy – to rule out entry to the euro just for the next parliament – prevents them from taking up the charge in the way many of their rank and file, and an increasing number of senior figures in the party, would like. Conservative Eurosceptics have always argued that entry to the single currency would mean removing from Britain an important part of its ability to govern itself. At the moment, they argue, the electorate can throw out a government that runs the economy badly and replace it with one with different policies. If, however, the government does not control the economic policy, then it hardly matters who is elected to govern, because one of the most important items of government is put outside its remit. How the people then make their point about a malfunctioning economy becomes a matter of some concern: after all, in other countries with defective democratic accountability, they riot.

Some Tories – including several who served in the Major government and who have learnt by what they regard as their mistakes – feel there is no point in having the luxury of opposition if it is not conducted in a principled way. They, picking up a theme common at constituency meetings around the country, say that the party’s opposition to the euro should be based on constitutional and not economic considerations. They argue that, even if the euro increases the national wealth (and that remains a highly debatable point), the price paid for this – the loss of the people’s control of their own economy – is simply unacceptable.

Most senior Tories from Hague down agree that the constitutional issue is important. But it is always the economic argument that dominates any utterances on the subject, because it is safer ground. The policy is framed to reflect only the economic consideration. The trouble with the constitutional argument is that it will not have gone away in five years, ten years, or even a hundred years: which is why, as the sceptics see it, ruling out entry for five years leaves the constitutional question painfully unanswered.

John Redwood, now back in favour if not back in the shadow cabinet, has likened this to ruling out murder for five years. Michael Portillo, refusing to acknowledge the absurdity of the policy, found himself skewered on the Today programme last month when asked why the Tories did not similarly qualify their support for the monarchy, to say that it, too, was firm for five years.

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The leadership fears two things if the policy becomes one of principle: first, that there will be defections from the party; and second, that business in particular will be hostile. These fears may have had substance three or four years ago, but those who want the policy hardened up say that things have changed.

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First, they point out that the experience of Shaun Woodward has hardly set a happy example to Tory MPs considering crossing the floor. Also, with the party’s fortunes picking up, there would be no shortage of willing applicants to take over safe Tory seats at the next election.

Second, the Tories would be quite justified in reminding “business” of how wrong it was when it last intervened in a high-profile debate about a European monetary system, before entry to the ERM in 1990. Then as now, the CBI was forecasting ruination if entry did not take place and, for a short time, the Institute of Directors agreed. Entry took place, but so, funnily enough, did ruination for many businesses, jobs and mortgages. Now business is by no means so united in favour of entry to the euro. Were the Tories to rule it out on a matter of constitutional principle, many businesses would not bat an eyelid; and the recent overseas investment figures support the sceptics’ case, that the favourable regulatory climate of Britain is what actually attracts money to this country.

Those who would like the policy hardened include some present members of the shadow cabinet and others close to Hague. It is rumoured that Portillo would support greater emphasis on the constitutional question, if only to stop him having so hard a time on the Today programme every time the subject comes up. However, two other fundamental considerations are now coming to the fore.

The first is the level of dissatisfaction with the present policy by many at the grass roots who feel the point of the Conservative Party is to defend the constitution. They sense the party is not being honest with them, and many feel patronised by the sophistry with which the argument is being conducted at present. For them, it is a black-and-white issue that brooks no other treatment; and they feel angry when they hear it discussed in evasive terms, because it reminds them of the sort of dishonesty and prevarication that marked the Major years and led to their enormous defeat. There is still a strong likelihood that many of these people, and other natural Tory supporters, will vote for the absolutist United Kingdom Independence Party at the next election, and so deny the Tories a number of seats.

The second consideration is that Labour may not be on the defensive on this issue for ever. Labour, not being a party wedded in its bowels to the British constitution, can quite acceptably make light of the constitutional question in a way that the Tories dare not. At the next election, and in any subsequent referendum on the euro, Labour could have a field day highlighting the absurdity of the Tories’ euro policy in a way that would not resonate now, but might resonate then. Some more thoughtful Tories worry that a policy such as the existing one, which by its very nature pays no heed to the constitutional question, might not survive a campaign intact, and would leave the Tories with the taint of pragmatism and absence of principle that did for them in 1997.

For the Tories, a shift in this policy would be the last, definitive break with the Major years. Those pressing for a change want Hague merely to say that, for as long as he is leader, his party will not support a single currency. He cannot bind his successor, but there is not likely to be a successor, the way things are now going, for some time. He can give as his reason for such a policy his belief – which it is thought he sincerely holds – that entry to the single currency would wreck British sovereignty. The policy would have the merit of being honest, and consistent with the principles of his rank and file. And if his party did not like it, then it would know exactly what to do.

The writer, a Daily Mail columnist, is our Conservative Party correspondent