Tory divisions over Europe back to fore

Single-currency debate: Redwood challenge to reject monetary union in election manifesto raises chances of referendum

John Major yesterday said he would continue to press British doubts over the single European currency at this weekend's Madrid summit, as John Redwood's new campaign against monetary union sparked a fresh bout of public infighting in the Conservative Party.

Former Cabinet ministers Lord Howe and Sir Leon Brittan, senior British EU Commissioner, and a former Bank of England governor, Lord Kingsdown, attacked Mr Redwood's demand that the Prime Minister rule out joining a single currency in the next parliament as "profoundly mistaken".

"From the Conservative viewpoint, a successful European Monetary Union has enormous appeal," they said. It would help "take politics out of economics, undermining the power of governments to rob savers and burden future generations with massive debt".

The promise of a referendum on the European single currency was moving up the political agenda again last night after Mr Redwood said Mr Major should at least promise not to enter EMU without one - and there were increasing signs of a growing Cabinet consensus behind such a pledge.

But Tory calculations have been complicated by Tony Blair's indication, in yesterday's Independent interview, that if a Labour government held a referendum on the single currency, his Cabinet would be required to stand by a collective decision to recommend joining. That will put pressure on John Major to say, if he decides to promise such a referendum, whether he would also insist on Cabinet unity.

Yesterday there were signs Kenneth Clarke, the Chancellor, could be persuaded to opt for a referendum in preference to the kind of pledge to rule out EMU in the next Parliament sought by Mr Redwood. But a question mark hangs over whether the Euro-sceptic Michael Portillo, Secretary of State for Defence, who also opposes a referendum, could agree to one in which all ministers were required to follow the government line.

Yesterday Mr Redwood said: "I am happy we are saying no to a single currency in this parliament. I hope when the manifesto is written, we will make clear statements for the next parliament. That is the time to do it. I would like to say no for the next Parliament so that people know exactly where we are. I would certainly like the Prime Minister to say there is no question of this country going in without a referendum."

Robin Cook, Labour foreign-affairs spokesman, said: "The truce in the Tory party is over. John Redwood has once again revealed the deep divisions among Conservatives over Europe."

In the Commons, Mr Major assured Mr Redwood, who challenged him for the leadership in July - he would be pressing at Madrid his arguments that the impact of a single currency both on those who joined it and those who did not needed to be much more thoroughly thought through.

Mr Redwood had gone out of his way to avoid accusations of disloyalty by saying he welcomed the way Mr Major had highlighted those issues at his meeting with Lamberto Dini, the Italian Prime Minister, at his recent summit in Florence.

Euro-sceptic hostility is likely to be fuelled this weekend by a probable summit decision to name the single currency - with the term "Euro" high on the list of possible candidates.

Mr Redwood said that it would be "churlish" not to engage in the debate about the name, but the more serious challenge for Mr Major was to stop any attempt by the French and the Germans to water down the Maastricht criteria for joining a single currency. British officials insisted the Madrid agenda did not provide for a debate on varying the convergence criteria laid down in the Maastricht Treaty as a means of rescuing French founder-membership of the single-currency project in the face of France's current domestic strife.