European Elections: Labour - Losses show Blair's lack of euro plan

ON THE eve of making his most positive statement on the single currency in February, Tony Blair telephoned members of his Cabinet to ensure they supported his plan to "change up a gear" to prepare Britain for membership.

Mr Blair's ring round revealed how he likes to do business - on a one- to-one basis rather than in cabinet discussions - and epitomised his ultra- cautious approach to Europe. "We haven't had a proper discussion about Europe for a long time," one member of the Cabinet complained yesterday.

As a chastened Mr Blair analysed Labour's disastrous performance in the European Parliament elections, some allies admitted last night that his European Union policy was in tatters. "The problem is that we don't really have a strategy at all," another minister said.

The Prime Minister told reporters yesterday that lessons would have to be learnt from the "very disappointing" results. While insisting the Government would "hold firm" to its single currency policy, he pointedly refused to bow to pressure from pro-Europeans in all three main parties for him to "take a lead" in swinging public opinion behind the euro.

Mr Blair is pursuing a Micawberish strategy in the hope that the public gradually comes to regard joining the euro as inevitable. But the shortcomings of this approach were exposed by William Hague, who turned the elections into an early referendum on the single currency.

The Tory leader's triumph puts a question mark over Mr Blair's plans to play down the euro as an issue at the next general election, by promising the voters that they will have their say in a referendum.

Some ministers, including Robin Cook, the Foreign Secretary, fear that line will be untenable in the heat of a general election battle. Their ranks will have been swollen by Labour's debacle in the European poll.

The Blair circle still doubts that Mr Hague will be able to repeat his trick at a general election. "People will have to choose between Tony Blair and a euro referendum and William Hague as prime minister. It will be no contest," one Blair aide said.

Mr Blair believes that people can be won round if they see the euro will bring economic benefits. At the appropriate time, he will be ready to give a lead. "The time to do that is in a referendum," said one aide. But his pro-EU critics argue the people will not be won over until Mr Blair comes off the fence.

One option is for Mr Blair to appoint a "Mr Europe" figure to lead the campaign for the single currency. The Prime Minister is too busy himself, and is unlikely to attend the launch next month of Britain in Europe, the embryo "Yes" campaign. Some Europhiles, furious that Labour's non- campaign in the European election played into Mr Hague's hands, are demanding Mr Blair attends.

But who would it be? Gordon Brown, the Chancellor, is reluctant to immerse himself in the euro, while Mr Cook has shown little interest.

The election results are likely to bring the appointment of a heavy- hitting party chairman responsible for getting a grip on the party machine and putting over the Government's message. Candidates for the job include Mo Mowlam, the Secretary of State for Northern Ireland, and Ian McCartney, a Trade and Industry minister.

The new chairman would also need to explain how Government policies have helped Labour's traditional voters, who abstained in their millions last Thursday. Privately, several ministers agree with Peter Hain, the Welsh Office minister, that Mr Blair has focused too much on Daily Mail readers and not enough on Mirror ones.