Why it would be in Mr Brown's best interests to see Britain join the euro

The Chancellor's ultimate opportunities may actually be greater if he backs Mr Blair's desire for a referendum
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The Independent Online

Gordon Brown has never walked taller. A Mori poll for Monday's Financial Times shows the Chancellor's net satisfaction rating at 29 per cent – compared to minus eight per cent for the Prime Minister. Yesterday, in post-Budget sessions before the Parliamentary Labour Party and before the Treasury Select committee, Mr Brown was, as expected, at his masterly best. The poll rating was made flesh.

He has also never looked more invincible as the candidate to succeed Tony Blair. There were those who treated this as a discovery after a Budget that deservedly enthused backbenchers, who were crying out for evidence that this was a Labour, not just New Labour, Government. But Mr Brown's claim to the glittering prize has always been much more anchored and less susceptible to fashion than that of the rather rapidly rotating cast of perceived rivals over the last five years.

The embarrassment inflicted yesterday by David Blunkett's injudicious use of the term "swamped" to describe the impact of asylum-seekers serves as a poignant illustration of just that. It maybe that this was a slip of the tongue by Mr Blunkett. But Mr Brown doesn't make slips like that. The strategic ability, his centrality in the formation of what he now rarely calls New Labour, and the sheer range and depth of his restless intellectual curiosity hardly need to be rehearsed.

And as Gordon Brown has never walked taller, so Tony Blair has had one of his most difficult periods since taking office. This isn't necessarily a matter of poll ratings; after all, there were crucial periods in the 1960s and 1970s when Roy Jenkins and Denis Healey outpolled Wilson and Callaghan. Chancellors are largely immune from the generalised abuse heaped on prime ministers. It's also a matter of a perceptible, if not particularly seismic, shift in the centre of gravity that makes Mr Brown somewhat more popular in the party and Mr Blair somewhat less so.

Some deconstruction of this product differentiation is advisable. On the detail of the Budget, including the use of national insurance, there were no doubt differences, though I'm told Mr Blair did not press the Chancellor to rule out any NI increases at all during the last election; instead, he insisted that the upper earnings limit should not be abolished. Abolition was not ruled out in the election. But it didn't happen either. Instead, the Chancellor hit on the ingenious formula of sidestepping it with a 1 per cent increase in NI on all incomes. This hardly alters the fact that the Budget – brilliantly executed by the Chancellor as it was – was, in its broad thrust, an operation fully approved by the Prime Minister, and one on which both men now stand or fall.

But this isn't the only, or even the main, reason for the shift towards Mr Brown. Another is widespread unease in the parliamentary party about the forward position taken by Mr Blair over Iraq. The inferences (and that's all they are – unsubstantiated inferences drawn from Mr Brown's relative and characteristic silence on the issue) that the Chancellor shares the suspicion of many of his predecessors, Tory and Labour, towards dangerous and expensive military adventures, have helped to foster the notion in the PLP that Mr Brown would not, left to his own devices, be backing President Bush as wholeheartedly.

It's true that the shift towards Mr Brown will create real temptations for some of his most zealous supporters, just as it did for the Jenkinsite right in the late 1960s. When the then Mr Jenkins was confronted by Bill Rodgers with 100 names of MPs prepared to demand Mr Wilson's departure, Mr Jenkins, it's said, affirmed that this would precipitate a sterling crisis and would not be in the national interest. Perhaps Mr Brown wants it more than Mr Jenkins did. But surely his reaction would be similar. All his strategic sense would argue that the collateral risks for the party would be too great.

Maybe it's at least as likely that the crunch will come over the euro as on Iraq. In his Budget, Mr Brown teased MPs by affirming yet again that his calculations were within the Maastricht criteria. But in laying stress on the fact that the Bank of England's remit is anti-deflationary as well as anti-inflationary – in unspoken contrast to that of the European Central Bank – he gave a strong hint of his deep scepticism about early membership. That is particularly so because doubt has been cast on whether spending plans could fall within the terms of the Eurozone stability pact. There is a strong case to be made that the latter could be resolved because of Mr Brown's success in slashing national debt. But it is still there as an argument to use if he chooses.

So why should Mr Brown give Mr Blair what he wants, especially given his genuine doubts and fears about the wisdom of early entry? As some of those around him will doubtless argue, why shouldn't he block Mr Blair and let him run out of steam and, in perhaps a relatively short time, out of office?

To answer this question, it's necessary first to confront why it might yet be in Gordon Brown's interests for him to tie himself even more closely to Mr Blair, rather than the reverse. For a start, the Budget tax increase will have to be sold to an electorate that will become increasingly impatient for results in the NHS. It's hard to think of anyone better qualified to do this than Mr Blair ,whose connections with old Labour, in the public mind, barely exist.

Second, Mr Brown may find favour with the party by differing from Mr Blair on foreign policy, but, as his acute political intelligence will tell him,it could well raise old spectres about Labour's attitude to defence and security with the voters.

Third, even on the euro, Mr Brown's ultimate opportunities may actually be greater if he backs Mr Blair's desire for a referendum than if he baulks it. This is partly because Mr Blair might decide to depart relatively early in a third term, having achieved membership. But, more importantly still, a referendum won with Mr Brown's vital support would surely enhance his stature still further. The present paradox is that Mr Brown's scepticism now would make his endorsement then all the more impressive.

The ideal – and most probable – course, naturally, is for Mr Brown and Mr Blair to agree their strategy in private together. But Mr Blair wants euro entry, as he is making increasingly clear. What, in the last resort, would Mr Brown do if Mr Blair used one of his famous Frost interviews to announce that he was going ahead?It would be a moment of truth with dire and unpredictable consequences if Mr Brown used the resignation weapon open to him.

In the meantime, by giving Mr Blair his backing, Mr Brown immeasurably strengthens the party's opportunity to cope with the problems ahead – re- engagement with a dangerously disconnected electorate included. It leaves the Government's critics no opportunity to drive a wedge between the two dominant figures in British politics. And it leaves Mr Brown's claims to the eventual succession as constant as ever.