Victory for Brown as Blair shelves referendum plans

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Indy Politics

Gordon Brown has scored a victory over Tony Blair by preventing the Prime Minister calling a referendum on the euro before the next general election or shortly afterwards.

As Downing Street struggled yesterday to play down differences between the Chancellor and Prime Minister over the proposed European Union constitution, it emerged that a euro referendum will not be held for at least three years.

The Independent has learnt that the Cabinet has agreed that the Queen's Speech on 26 November will include only a draft bill on how a referendum would be held. This means that the measure will be published for public debate but not pushed through Parliament.

Mr Blair had hoped to secure a slot in the legislative programme for a bill to be enacted before the next election, enabling him to call a plebiscite later in this Parliament or early in his third term if Labour retains power. But Mr Brown insisted on limiting the legislation to draft form.

The decision indicates that the Prime Minister has given up hope of getting a law allowing a referendum on to the statute book before the election, which means a public vote on the euro is unlikely before 2006 at the earliest.

To emphasise his personal control over euro policy, Mr Brown is expected to publish the draft bill alongside his budget in March, when he will rule out a fresh assessment of the Government's five economic tests until after the election.

Mr Brown's victory comes amid growing tension between him and Mr Blair over Europe and a power struggle between them for control of Labour's general election campaign. The Prime Minister has recently blocked the Chancellor's request to sit on Labour's National Executive Committee (NEC), a post he relinquished in 1997. Mr Brown only learnt of Mr Blair's snub by looking at the Labour Party website.

The Chancellor has infuriated Downing Street by demanding an assurance that the new EU treaty to be agreed next month will not lead to a common tax and fiscal policy. He wants the draft constitution to be changed to explicitly rule out such moves.

Yesterday Mr Blair's official spokesman insisted that the Prime Minister and Chancellor were "on the same page" because a common tax policy was one of the "red lines" Britain would not cross in the EU negotiations. But the spokesman stopped short of saying that Mr Blair would seek to amend the draft constitution in the way demanded by Mr Brown.

The Tories sought to exploit the different tone struck by Mr Blair and Mr Brown, saying the Chancellor's intervention undermined the Prime Minister's refusal to call a referendum on the constitution.

In his final appearance before standing down as Tory leader today, Iain Duncan Smith said Mr Brown's comments amounted to a warning of a "drift to a federal European superstate". He said the proposed constitution represented a "fundamental change".

Mr Blair replied: "If we do, as I believe we will, protect our tax and defence and foreign policy, there is no case for a referendum other than the true case of the Conservative Party which is ... to get Britain out of Europe."

Charles Kennedy, the Liberal Democrat leader, said Mr Brown's remarks contradicted the Government's claim that the constitution was no more than a "tidying-up exercise". He challenged Mr Blair to say whether he agreed with the Chancellor that the proposed constitution "would lead to tax harmonisation and a federal state in Europe".

Denying any split, Mr Blair said Britain was fighting to ensure there would be no dilution of its veto on tax issues, and that he himself had warned that setting taxes centrally would kill jobs and stifle growth. "It is precisely for that reason that we are making it clear that there cannot be any tax harmonisation or abolition of the unanimity rule on tax," he told MPs.