Poll on euro may now be held in 2003

TONY BLAIR is set to shelve until 2003 at the earliest the referendum on whether Britain should join the single currency.

Some cabinet ministers believe the referendum, originally planned for the autumn of 2001, may be delayed until after the next general election. They argue such a move would bring Labour's policy into line with that of the Tories, putting William Hague under intense pressure to rule out ever joining the euro.

Opinion in the Cabinet is hardening against an early referendum following Labour's unexpected defeat in the European elections. Several ministers believe the Government's current policy, which envisages a plebiscite soon after the next general election, is no longer tenable. "The election would be hijacked by the single currency issue, just as the Euro elections were," one minister said.

Close allies of Gordon Brown, the Chancellor, want Labour to announce before the next election that a referendum would not be held early in the next parliament. However, they believe Mr Blair might be unwilling to risk a referendum in the run-up to the following election, so he might defer ituntil Labour's third consecutive term in office. A final decision on Labour's policy will be made next year, when Mr Blair will assess the strength of the euro on the financial markets andBritish public opinion about it.

Anti-euro business leaders last night claimed credit for forcing the Government to stall its plans for joining the euro. David Owen, the former SDP leader, told the Business for Sterling conference in London: "It is now clear there is no prospect - politically or economically - of Britain joining the eurozone for some time."

Tory heavyweights Kenneth Clarke and Michael Heseltine have told friends they will not join the pro-euro campaign unless Mr Blair throws his weight behind it. Mr Blair insisted yesterday that his single currency policy had not changed.

Mr Hague is seeking to head off a split in his party over whether Tory MEPs should sever their links with the European People's Party (EPP), the main centre-right group in the European Parliament. Tom Spencer, who stood down as a Tory MEP at the elections, claimed a deal had been reached under which the Tories would sit with the EPP in Strasbourg but stay loyal to their own manifesto opposing the single currency. In return, the EPP would drop its commitment to a "united states of Europe".

As the Shadow Cabinet discussed tactics last night, Mr Hague's spokesman denied an agreement had been struck, but did not rule out a compromise.

Julian Critchley,

Review, page 4