Donald Macintyre: Mr Clarke could turn out to be bad news for Labour

'It will be one less excuse for not holding the referendum this country needs to determine its destiny'
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The Independent Online

Harold Wilson's continually repeated adage – first used in a briefing to lobby correspondents in 1964 – that a week is a long time in politics may just be vindicated once again today. Last Wednesday night Gordon Brown magisterially set out at Mansion House a new orthodoxy on the single currency which is widely judged to make British euro-entry highly improbable before the autumn of 2003 at the earliest, and which has raised fresh questions, to put it mildly, over whether a referendum will take place at all in this parliament.

There followed, in the wake of the Queen's Speech, an argument about private involvement in the public services conspicuous – through no fault of an impressively pro-public service but wholly pragmatic critique from the Institute of Public Policy Research – for generating much heat and virtually no light. What may make this one of the longest weeks – in Wilson's sense – in recent memory is the potential landscape-altering return to mainstream politics of Mr Brown's predecessor, a man more powerfully engaged in both these topics, by experience rather than mere inclination, than anyone else in his party.

But if a week is a long time in politics, three and a half years can seem rather short. An easy reading is that on the euro, at least, we have been here before. This feels a little like October 1997, when after a period of uncertainty the Chancellor pronounced. The door was kept – theoretically – open to entry. Everyone was then supposed to shut up about the subject, precluding any prospect of an early attempt to win over public opinion. And entry didn't, of course, happen.

This time, moreover, there is a difference. Those who didn't shut up last time have, on this issue, largely been disabled. Stephen Byers and Robin Cook have been moved from posts where they had a locus on a single currency, and their two successors sternly enjoined, by all accounts, at the time of their appointment not to let a cigarette paper slip between their department's views and those of the Treasury.

Peter Mandelson, the Chancellor's chief irritant, is out of government altogether. Indeed lively expectations in Brussels that he would be given a relatively minor role representing Britain on an EU-wide committee set up by the Belgian presidency to consider Europe's future have not been fulfilled. Whether or not Mr Brown had anything to do with this, it is unlikely that many tears were shed at the Treasury when Tony Blair decided not to send him.

Among well-informed pro-Europeans there are two ways of looking at this. Optimists argue, though with rather less conviction than before, that Mr Blair still believes that the costs of delay, to inward investment as well as to British influence in Europe, are unacceptable, but has cleverly bought into chancellorial caution because he has calculated that it is worth paying the price of delaying the attempt to persuade the public of EMU's merits in order to prevent divisive speculation on the issue in the run-up to a decision.

Some even hopefully question whether Mr Brown is as adamantly opposed to entry in this parliament as he is judged to be, but believe that in any case Mr Blair is still prepared for a shoot-out, if necessary, with the Chancellor; that he retains the leverage of holding the major influence, not least through timing, over Mr Brown's chances of becoming Prime Minister. And that seeing euro notes and coins become accepted in continental Europe will affect public opinion much more dramatically than political speeches.

The pessimists – and they include some who were highly optimistic up to the election – see Mr Blair as having decisively capitulated to Mr Brown. They do not even say this was necessarily against the Prime Minister's own instincts because they begin, for the first time, to wonder whether, for all his warm words, Mr Blair's heart was ever truly in entry. They say that no doubt Mr Blair will favour entry if all the difficult questions, from the opinion polls to the exchange rate gap, miraculously sort themselves; but that he will do nothing very much about sorting them himself.

Some Foreign Office mandarins, for example, are dismissive of Treasury missives stressing the intellectual rigour of what they regard as essentially political tests; but they recognise that Mr Brown will be in a strong position, come an economic assessment planned for completion at the end of a two-year period, to suggest to the Prime Minister that a becalmed mid-term is just the wrong moment to call a referendum of the sort that nearly ditched François Mitterrand over Maastricht. Which would leave the question open until a third term, when Mr Brown might finally take Britain in – as Prime Minister.

No one doubts that Mr Brown has serious arguments for delay in his armoury. The requirement, accepted by most (though not quite all) experts, that sterling must come down in value as well as the euro rise before EMU entry is held to be an invitation to "talk down" the pound in ways perilously close to the devaluation which ditched Harold Wilson in 1967 and John Major in 1992. The deficiencies of the European Central Bank do not need to amount to a "sixth test" when they can be deployed in assessing one of the five – the one which questions whether the EMU regime has the flexibility to cope with economic variation.

But one argument of those close to the Chancellor may now be on the brink of collapse. That is the claim that a referendum may be too risky because there isn't all-party consensus on entry.

If Kenneth Clarke becomes a Tory leadership candidate today, his hopes of victory, at least among those Tory MPs who have not yet realised that the party's obsession with the single currency is part of what has cost it dear, will be despite rather than because of his favourable attitude to EMU. His appeal to the party rests more with his ability to speak with authority and conviction about public services, a subject which, amazingly, appears to be tripping up the Government (just when it ought to have the advantage) because it raised without adequate explanation the spectre of more private sector management.

That doesn't alter the fact that come a referendum Mr Clarke knows which side he will be on. Given Michael Portillo's declared – and highly sensible – intention not only to accept an agreement to differ on EMU if he becomes leader but also to talk much less about the subject up to any referendum, it is likely that Mr Clarke would reciprocate if he wins. But the Government would know, if that happened, that the monolithic Tory opposition to entry – however bravely led by Mr Portillo – in any referendum would be at best undermined.

To some extent that outcome applies even if Mr Clarke runs but doesn't win. For if he is a candidate he will at the very least remind the voting public of his stature as a politician over the coming weeks. But it applies even more if he does win.

A Clarke leadership would be bad news for Labour, however much ministers may try to claim otherwise if he runs today. But for a government already remarkable free of excuses and alibis thanks to Mr Blair's extraordinary landslide it would remove yet another. It will be one less excuse for not holding the referendum the country surely needs, to determine whether its destiny is as a leading partner in the EU.