By Andrew Grice, Political Editor
30 August 2001
Peter Hain, the Minister for Europe, will suggest on Thursday that eventual British membership of the European single currency is inevitable.
His remarks will spark another flurry of speculation that Tony Blair intends to call a referendum on the euro before the next general election, despite the more cautious approach favoured by the Chancellor, Gordon Brown.
In the left-wing weekly Tribune, Mr Hain expands on the Government line that membership depends on the five economic tests set by Mr Brown. He says: "The euro is marching on and no one thinks the decision can be postponed for ever, apart from the right of the Tory party." He adds: "I have always thought that the euro is a logical development of a single market and there is a need for it, in order to introduce price transparency and the harmonisation of costs."
He says public opposition to euro entry will diminish. "Next year is going to be very important as people will have new notes and coins in their wallets when they go abroad. Companies trading with Europe will start to deal in euros. Some are already considering paying their British staff in euros, while shops are talking about displaying prices in euros."
On his appointment as the Minister for Europe after the June general election, it was unclear whether Mr Hain was a Eurosceptic or a Europhile. Although he urged supporters of an early referendum to "cool it", his latest comments put him in the pro-euro camp. Allies of Tony Blair say he installed Mr Hain because he regards him as a good communicator to "sell" the euro to a reluctant British public. Mr Hain insists in his interview that the Government was right not to rush towards a referendum after Mr Blair won a second term. He believes there has not been enough information on the advantages of joining the single currency. He says: "If we were to call a referendum, the only way a majority would vote 'yes' is if they thought the decision was being made in the interests of jobs and their future prosperity, not because of some kind of ideological pro-European dogma."
There have been contradictory signals over the euro from the Government since the election. Mr Blair's aides believe there could be a "window of opportunity" to call a referendum in the autumn of next year but those close to Mr Brown, including Ed Balls, the Treasury's chief economic adviser, have suggested a referendum would divide Labour and should be shelved while the party delivers its promised improvements to public services.
Another factor in the Government's decision is the Tory leadership election. Cabinet ministers believe Mr Blair would be more likely to call a referendum if Kenneth Clarke, who would campaign for a 'yes' vote, defeats Iain Duncan Smith, who has said would never vote to join the euro.
In his interview, Mr Hain also urges Mr Blair to pay more attention to his MPs and party. "To succeed, the Government has got to do more listening, engaging and working co- operatively. We will not win the European argument unless we engage party members and trade unionists and you can't do that by staying aloof."
But he warns the unions that their campaign against plans to give the private sector a bigger role in running public services is "playing into the hands" of Blairite modernisers who want to break the party's link with the unions. In an attempt to reassure the unions, he says: "Wholesale privatisation is not proposed. The final plan will be far more modest."