New referendum clash as Clarke digs in

Conservative Central Council: Good news as party funds improve but bad news as propaganda paper delayed
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An imminent Cabinet row is looming after clear signs that Kenneth Clarke, the Chancellor, is still digging in his heels over his opposition to a promise of a referendum on the single currency.

Mr Clarke, who was attending the Conservative Party Central Council in Harrogate, North Yorkshire, is resisting powerful Cabinet pressure led by John Major to secure full backing for an early public commitment that Britain will not enter a single currency without a referendum.

The Chancellor, with the backing of Michael Heseltine, the Deputy Prime Minister, is sticking to his tough line despite strenuous efforts to secure a compromise by ensuring that the Cabinet would have to take collective responsibility for a decision to join a single currency - and expressions of optimism by some Cabinet colleagues that they will still succeed.

Although the final showdown has not yet been fixed for next Wednesday - the last meeting of the Cabinet before the Commons' Easter recess - some Cabinet ministers are impatient to get the decision over with at that meeting.

The fierce rearguard action by Mr Clarke leaves a questionmark over whether he is prepared to stay in office if the Prime Minister goes ahead with a commitment to a referendum.

A paper detailing the options of how to run a referendum has been prepared by Malcolm Rifkind, the Foreign Secretary. The paper deals with such questions as whether the referendum would take place before or after a decision by Parliament to approve membership of European Monetary Union (EMU), what the question would be and, above all, whether all the members would have to campaign for a "yes" vote or resign from the Cabinet if it did take a decision to join a single currency.

Mr Clarke and Mr Heseltine are said to be deeply concerned that concessions to those backbenchers on the Tory Euro-sceptic right who have been pressing for a referendum promise will only result in wider demands and that there is a risk of the party's European policy being "salami sliced" by concessions both to backbenchers and to the strident demands of Sir James Goldsmith's Referendum Party.

The group of eight former "whipless" backbenchers last week did indeed follow Sir James's example by calling for a referendum on wider European issues than simply the single currency.

Hopes of a compromise rest with Mr Major's personal view that any referendum should carry collective responsibility - unlike the 1975 referendum in which Harold Wilson, the then Prime Minister allowed his Cabinet ministers to campaign according to their own views without risking their jobs.

If there was collective responsibility that would mean that Euro-sceptics would have to resign if they wanted to campaign against British membership of EMU.