Goldsmith pressures Tories over Europe

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The right's continuing divisions over Europe were exposed afresh last night as Sir James Goldsmith stepped up his attack on John Major and pro- European Tories complained that Conservative Central Office had cancelled a high profile conference on the future of the European Union.

Baroness Thatcher's former economic adviser last night confirmed he will stand for Sir James's Referendum Party against Kenneth Clarke, the Chancellor. Sir James is today backed by the Sun, which in a prominent editorial supports his call for a full-scale referendum on Britain's membership of the EU.

Meanwhile pro-European backbenchers reported that plans by Tom Spencer, chairman of the Tory MEPs, to convene Cabinet ministers and others to address a summer conference on Europe in London, had been cancelled by Brian Mawhinney, the party's chairman.

Professor Alan Walters, a monetarist economist who has consistently fought against Britain's entry into a single currency, will stand for Sir James's party against Mr Clarke to underline the campaign against economic and monetary union.

In an interview with the Daily Telegraph newspaper Sir James accused the Prime Minister of "feeble" leadership and said: "He is not leading. He is trying to create an equilibrium." Sir James added of the current Tory party in relation to Europe: "Does it matter whether you bring in the appeasers who give in bit by bit or the enthusiasts who want to commit suicide with great enthusiasm?"

Professor Walters yesterday told the cross-party Commons select committee on Treasury affairs he would be standing against Mr Clarke, who had a majority of 19,766 at the last election in the Nottinghamshire seat of Rushcliffe.

Mr Clarke is likely to shrug off the challenge, but with the Tories being unpopular, the intervention of an anti-European candidate could take vital votes away from the Chancellor.

Professor Walters told the committee that the pound had been involved in "dirty floating" since its ejection from the exchange rate mechanism (ERM), involving intervention by the Bank of England at an undisclosed level.

He clashed with Lord Lawson, the former Chancellor, after warning the Prime Minister that Lord Lawson's policy of shadowing the German mark was risking forcing the economy into recession. Lord Lawson resigned over Professor Walters' influence on Margaret Thatcher when she was Prime Minister.

Meanwhile, Lord Archer, former Conservative Party deputy chairman, took his campaign to hammer home the implications of the Goldsmith challenge a step further yesterday, spelling out just where the damage could be wreaked. Praising former Cabinet ministers John Redwood and Norman Lamont for taking the threat of the Referendum Party seriously, he suggested its candidates could make holding the Tories' 23 most marginal seats all but impossible.

The Sun article warns of the "dragon" threatening the UK - the EU - "an unelected body, answerable to no-one, which aims to devour our national identity". The newspaper says: "Britain's future role in Europe is the biggest issue this country has faced in the past 300 years.

"Who governs Britain - Parliament or Brussels? The Sun believes the people must be given the right to choose."