One anniversary went virtually unnoticed this month. The deadline for the government’s assessment of our membership of the single currency, 7 June 2003, is now less than a year away. But everyone in Whitehall is gearing up for a decision much sooner. The single biggest decision of Tony Blair’s premiership and Gordon Brown’s pre-premiership is hurtling towards them. The more they try to bottle up public discussion of the issue, the more it preys on them in private.
Supporters of the two sides – the Prime Minister’s office and the Chancellor’s – are working through their own strategies. This is what officials and ministers close to Blair believe they are aiming towards: a positive assessment to take place at the earliest in November, at the latest next January.
Some around Brown believe they can and should hold off until the spring, but concede that further delay could box them into a corner. They remain extremely wary of rushing in to the grand project.
The official purdah is still in place, just: there have been rhetorical fits and starts, but a truce has been agreed until the end of the summer recess. Then, come September and the conference season, Blair is expected to begin his first concerted attempt to win round public opinion. This will be the start of his shadow campaign for the euro, with speeches extolling its merits. Notionally, the policy – of waiting for the five economic tests – will be unchanged. But the tone will be quite different.
The next move will depend on public and private polling. Blair’s polling guru, Philip Gould, is devoting much of his work to this single issue. Opinions vary, but the consensus among the Blairites is that a 45 per cent figure in favour of joining should be enough to trigger a referendum. At present, government advisers believe they are short of that target (“in the early forties”, says one) but within reach. Supporters are convinced that, if well handled, a positive Treasury assessment could of itself increase the “yes” camp’s poll ratings by up to ten percentage points. A vigorous campaign led by the PM and the Chancellor, without a chink of light between them, would give another boost.
Insiders admit, however, that success in the campaign itself, even with such favourable winds, is by no means guaranteed. The fear that haunts them – particularly in the light of the Irish government’s failure to win referendum support for the Nice treaty last year – is that voters, in their current anti-politics mood, would seize any opportunity to cock a snook at their leaders.
Blair, according to Downing Street insiders, knows his mind. The language he used in a recent interview on Newsnight (he said the decision was getting “close” and that staying out would be a “betrayal”) was, according to those involved in the planning, “very carefully researched”. In No 11, it caused no little disquiet, as it appeared to prejudge the outcome of an assessment that has not formally begun.
Unless we have a war, Blair wants to proceed quickly. But, to their increasing frustration, his supporters know that Brown has a de facto veto – and he is letting it be known that he has. As ever, he is keeping everyone in No 10 guessing. “He doesn’t tell us what he is thinking,” says one senior official.
Four scenarios are being considered. Two are compromises, two are not. An absolute “no” in the assessment would amount to a declaration of civil war within the government, pitting the Blairites against the Brownites. Euro supporters argue that a “no” would cause huge economic and political damage. They point to figures showing that new inward investment in the UK is declining as a proportion of investment to the EU as a whole. This, they say, would be only the start. The City would be compromised. Its continued dominance has been maintained on the assumption that we will join reasonably soon. Blair would be compromised. Not only would he go down as the man who funked the big decision, but his bargaining power on the big international questions would diminish. And everyone would know who had the upper hand in the government.
Almost certainly, it would not have to be that way. The Brownites concede that the government is bound to support membership of the euro “in principle”. Currently in vogue are two variations on the “yes but not now” theme. The ultra-cautious one would give a lukewarm assessment and suggest that the issue be revisited at some point in the future, without a commitment. This, however, might well end up having the same fratricidal effect as an out-and-out “no”.
A more positive “not now” scenario is being mooted. This would suggest that convergence had been all but achieved. Britain would be described as nearly ready to join. The case would have been made, but, given the current economic uncertainties, not yet made overwhelmingly. The issue would be monitored at frequent intervals, and a new deadline set. Such wording would leave the option for a referendum to coincide with the next election, or for the big push to happen immediately after a third Labour victory. This would not enthuse many around Blair, but, if the language were positive enough, they might have to live with it.
For the moment, Brown and his right-hand man, Ed Balls, are desperate to keep a lid on the discussion. The secrecy has become obsessive. The Labour majority on the Treasury select committee of MPs has conspired to water down and delay an investigation into the assessment, rendering it virtually meaningless. The Treasury insists the caution is designed to preserve the economic integrity of the tests, and to ensure that, whatever decision is taken, it is seen as impartial.
Treasury officials have made it clear to me that there is no intention to announce the start of the formal assessment, or to give any advance indication of when it will conclude. It is, they say, too market-sensitive. So, one day, suddenly, assuming it will not have been leaked or planted (a big assumption), Brown will present the findings to cabinet in the morning, with a parliamentary statement and publication of the document that afternoon. Brown’s people are adamant that the actual report will be “very substantial” in size. “This is the most serious document the Treasury will have produced over the past 30 years,” says one. “The whole reputation of the Treasury depends on the credibility and seriousness of the analysis. We know it will be heavily scrutinised.”
The Brownites point to the original remit of the October 1997 statement that set out the present policy. The assessment has to demonstrate that the case for joining the euro is “clear and unambiguous”. Like in a court of law, it has to be proved beyond reasonable doubt. “We’re certainly not going to say: ‘It’s a close call, let’s give it a go’,” says one Brownite, with palpable disdain.
If Brown does permit a “yes now” assessment, it will have to look as if a Chancellor jealous of his intellectual authority has not climbed down. He would have to campaign for the currency with at least as much vigour as Blair. But that, in any case, would be a given. Anything else, even a hint of reserve on the part of Brown, would lead to calamity for them both. So Brown would need time to reposition. He has left himself just enough room to wiggle, but shows no sign of wiggling yet.
What of the date for the referendum? June and September 2003 are most in favour at the moment. May is not out of the question, but some argue that the referendum can’t piggyback on local government elections. To win over hearts and minds and to ensure a strong turnout, it has to be seen as a momentous ballot in its own right.
On that point, both sides agree. It will be a seminal moment for new Labour and for its fault line, the Blair-Brown relationship. Like a target on a radar, Blair and Brown are now locked in. They bought themselves time in 1997, when they refused to confront the issue. Now that confrontation beckons.
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