Why this man is Major's nightmare

Forget Sir James Goldsmith the billionaire playboy with a glamorous daughter married to Pakistan's favourite son. Now he has a political mission: to force a referendum on Europe. As Paul Vallely reports, it is more than an eccentric hobby

It was a curious collection. In the bowels of a Bournemouth hotel the high priest of parliamentary Euro-scepticism, William Cash, was throwing a private party for a selected few of the hundreds of true believers who had filled the hotel's ballroom for what turned out to be the biggest of the fringe meetings at the Conservative Party conference.

It was a gathering of the hard right. In the centre of the room Norman Tebbitt was in conversation with Boris Johnson of the Daily Telegraph. In the corner the young historian Andrew Roberts was holding court. But there was no doubt who was the centre of attention. Sir James Goldsmith, the star speaker at the rally. His foray into British politics seems whimsical, a pastime for a rich man grown bored with business.

That was two years ago. Yesterday Sir James bought full-page advertisements in four national newspapers making clear that the referendum idea being floated by the prime minister - on the lone issue of a single currency - would be an "empty gesture". He called for voters to support his new Referendum Party, which is dedicated to a full debate "on the sort of Europe of which Britain wants to be part". Britain has seen oddball fringe parties before. But this is different. The Anglo-French billionaire Member of the European Parliament has vowed to put at least pounds 20m behind his new party, which will put up candidates in every constituency at the next general election where the sitting MP is not committed to a referendum.

Yesterday a Tory party memo revealed that Sir James has a staff of 23 who have processed applications from 1,000 potential candidates, of whom some 300 have been approved. "These candidates are credible; some are former Conservatives and are not fringe nutters," it said. More than that, it has a database of 25,000 supporters and is preparing a direct mail campaign of 30,000 letters in 25 constituencies. It has commissioned a telephone canvassing company, is about to take on a major advertising company and is in discussions with the opinion pollsters MORI.

The party is still grading marginal seats to selecting those it will target. It has already decided to concentrate on Labour marginals with significant Asian communities. But its chief focus will be Conservative seats. Tory MPs in the 90 most marginal seats, those with majorities up to 7,000, are in various states of alarm. They fear that a referendum candidate could cost them 1,000 votes or more and make their seat more vulnerable to a Labour swing. The secret Tory Central Office memo yesterday predicted it could cost the party 25 seats.

The external threat from Sir James, combined with the internal pressures generated by the Euro-sceptics, is finally beginning to pay off. Mr Major, under pressure from his party chairman Brian Mawhinney, is inching towards a referendum to endorse a decision by the Cabinet that Britain should join a single currency. Yet Sir James is not a Euro-sceptic with more money and idiosyncrasies than most. On many issues he holds radically different views. What is as yet unknown, and troubling for Mr Major is just how powerful Sir James could be, not just this week as the Tory party debates what position Britain should take in the forthcoming Inter-Governmental Conference on the future of the European Union, but over the next few months in the run-up to the election.

Sir James Goldsmith is the British version of the Nineties businessman- turned-politician. America has Steve Forbes, the multi-millionaire presidential candidate, following the path pioneered by Ross Perot. Italy has had Silvio Berlusconi and France Bernard Tapie. Certainly Sir James is as formidable an eccentric as any of the others. The son of a Tory MP, he started making money while still at Eton, winning pounds 8,000 on the horses. He went on to make an estimated $2bn as an international deal maker before deciding that the market was a house of cards and presciently selling most of his companies in 1987 - just before the Wall Street crash.

Sir James is also formidably clever. Like many men who have run large business empires, he likes to deal in apparently simple, sweeping generalisations that could either be profound or mundane. Given his track record as an investor, it's probably worth betting on him being profound.

The political philosophy he developed after leaving business was a reaction against the globalisation of markets from which he had profited so hugely and yet which he had begun to suspect would eventually self-destruct. Three years ago he published The Trap, a tract arguing against the received wisdom on free trade:

"Global free trade will shatter the way in which value-added is shared between capital and labour ... In mature societies, we have been able to develop a general agreement as to how it should be shared ... Overnight that agreement will be destroyed by the arrival of huge populations willing to undercut radically the salaries earned by our workforces. The social divisions that this will cause will be deeper than anything ever envisaged by Marx..."

The opening up of world trade to the four billion low-wage workers in China and East Asia threatens not just the economic prosperity of the West but its social cohesion, he warned, echoing fashionable communitarian ideas as well as Pat Buchanan's populism. All this has gone down terribly well in France where the protectionist response to "filthy foreigners who pinch our jobs" is far more politically respectable than it has ever been here. He won a seat in the European Parliament having formed a new party, L'Autre Europe, which secured 13 other MEPs. They have formed an alliance with a Danish and a Dutch MEP to form the anti-federalist Groupe Europe des Nations, of which he is president.

This protectionism is anathema to the right in the UK whose economics have long been steeped in the free-market liberalism of Adam Smith and David Ricardo. Goldsmith is in favour of a European free market surrounded by a tariff wall. He does not share most Euro-sceptics' desire to see Britain as the "Hong Kong of Europe", competing in the world market unfettered by European regulations. His desire for some strong Euro institutions to supervise joint foreign, defence and environmental policies has provoked public fury from Conservative anti-Europeans and the rival Euro-sceptic UK Independence Party, whose leader Dr Alan Sked dismissed it as "the politics of Sunset Boulevard practised by an ageing playboy plutocrat".

Nor are the Tory right in sympathy with Goldsmith's attacks on the damage done to the Third World by Western culture, which reflect his dark green ecological views. The trouble is they cannot afford to pass up an ally who so vehemently opposes the slither to federalism in Europe that they fear and who is prepared to match the main parties' election spending to campaign against it.

There is no precedent for such a well-funded spoiler party in British politics and with an election that may be finely balanced its influence could be critical. The leading psephologist Colin Rallings of the University of Plymouth reckons that if Goldsmith wins just 1.5 per cent of the vote (taking two-thirds of his votes from Tories) it would cost John Major 11 or 12 seats. No wonder that the Prime Minister is calculating how much he will have to concede to spike Sir James's guns.

His strategy is as yet unkown. Most commentators think Goldsmith & Co might win on a single currency referendum but lose a more general referendum on European integration as the public's irritation with Brussels would be outweighed by its collective fear of being left behind by the rest of Europe.

Those who have worked closely with him in the past insist that the man is an acute strategist. "There will be a strategic goal," said one confidant hopefully, before conceding he had no idea what it was.

One possibility, some associates venture, is that the Referendum Party is merely "a tactic in a longer-term strategy to re-orientate the right after an electoral defeat and even, possibly, after a split in the Tory Party". Goldsmith's aim then would be to bring part of the party over to protectionism so that the kind of debate which is going on among US Republicans could become respectable here. Not since Oswald Mosely has a mainstream British politician flirted with such thoughts. Others are more disdainful.

Echoing Kenneth Clarke's dismissal of Goldsmith as an eccentric millionaire, who lives in Paris and Mexico, and who should not be interfering in British politics, they describe him as a piqued maverick who just operates on whim. "He's clever and shrewd on one level," said one doubter yesterday, "he's formidable intellectually but he lacks political common sense". It will yet be some time before it is clear which of the verdicts history might pass. Either way, as John Major charts a way to keep his warring fractious party together a complication on the scale of Sir James is something he could probably have done without.

A few thoughts on life, the universe and everything

On crusading: "Anyone who has had the good fortune to succeed in business should be prepared to put up their money for a cause that they believe in."

On romance (quoting the French author Sacha Guitry): "When one marries one's mistress, one creates a vacancy."

On the environment: "Both fresh and sea water are being poisoned ...and we are living with the threat of up to 40 potential Chernobyls waiting to happen."

On the Government: "It's impossibly mediocre and incredibly dangerous because it has absolutely no conception of where it wants to go."

On conventional economics: "People tell me that things are much better in England, that there are more washing machines and freezers per family than there used to be. That is an absurd way of measuring contentment, social stability and prosperity."

On the referendum: "England must have the right to vote on things that will change the destiny of the nation. To insist that these changes can come about without thought, without debate, and without a vote, is madness. It's sleepwalking into an electric saw."

On Europe: "Imposition of a single currency would unleash centrifugal forces that would tear Europe apart. I am a passionate European. I am also passionately against Maastricht. My belief in Europe fuels my opposition to this treaty."

On Britain's standing in the world: "They are selling Britain as the Mexico of Europe, as if it was an honour to pay low wages. We've gone mad."

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<b>Kathryn Williams</b>
When I was supporting Ray La Montagne I was six months pregnant. He had been touring for a year and he was exhausted and full of the cold. I was feeling motherly, so I would leave presents for him and his band: Tunnock's Tea Cakes, cold remedies and proper tea. Ray seemed painfully shy. He hardly spoke, hardly looked at you in the face. I felt like a dick speaking to him, but said "hi" every day. </p>
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