Euro elections could break the Tories' patched-up party

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Yesterday's Cabinet decision to hold the 1999 European elections under proportional representation may appear at first glance of interest only to constitutional reform anoraks. It is anything but. For the hugely relieved Liberal Democrats, it not only yields up more electoral territory to win, it also exorcises a demon: the memory of David Steel's failure to extract that very reform in return for propping up Jim Callaghan's minority government 20 years ago. But it is schism in the Tory party that remains by far the most seismic of its potential consequences.

That there was not more evidence of a Tory split after William Hague's election as leader was due more to the vanquished than to the victor. Kenneth Clarke paid a magnanimous visit to Mr Hague's victory party. He then went on to persuade deeply hesitant figures on the pro-European left of the party - such as Stephen Dorrell, David Curry and Ian Taylor - to accept posts in the shadow team, despite Mr Hague's Euro-scepticism. They did so under a novel formula which relieved them of the obligation to defend Mr Hague's promise to oppose for at least 10 years British entry into a single currency, but required them not to attack it, either. Does this not look, on the face of it, a party desperate to reunite at almost any price? Why on earth, therefore, should it break apart over something as trivial and hitherto mind-numbingly uninteresting to the public as elections to the European Parliament?

The reasons have to do in about equal measure with the principles and personal ambitions of some not very well-known Tory politicians, those who either hold, or aspire to hold, seats as members of the EU parliament.

It is theoretically possible that Mr Hague will draw up for the European elections a manifesto so bland that even the most ardent pro-European could comfortably live with it. It is doubtful, however, whether dominant figures of the Shadow Cabinet, the Howards, Lilleys and Redwoods, would allow him to do that even if he wanted to. The notion that a referendum on the Amsterdam treaty, given the new administration's current popularity and the modesty of the changes agreed at the summit, would result in anything but a huge victory for the Government, is absurd; but that did not stop Mr Hague calling for one. Mr Howard, in particular, has not let up in trying to commit the party to renegotiating, under threat of withdrawal, the terms of British membership of the EU, something he fondly imagines may prove an election winner in 2001 or 2002. All the omens are that Mr Hague will insist on a manifesto that at the very least reiterates outright opposition to British EMU membership on any foreseeable timetable, and which would therefore be hard to stomach for at least 15 of the 18 sitting Conservative MEPs, not to mention those of the ex-MEPs who aspire to return to Strasbourg.

That might not be enough on its own to provoke a breakaway; but it may well be compounded by the party's choice of candidates. First, most of the party's incumbent MEPs come from the South-east, so there will be fierce competition among them for limited places on the same regional list. Second, the leader will be under intense pressure to purge some of those notoriously pro-European persons from the candidates list - or at least to put them sufficiently low down the lists to give them little chance of victory. So there may be a practical, as well as a principled, reason for these Strasbourg aspirants to form their own pro-European centre- right grouping, with their own candidates' list, manifesto and business backing: namely, that it would, thanks to a PR system, provide easily their best (perhaps their only) chance of being elected.

What, supposing these heady events so unfolded, would be the role of the party's still biggest active politician, Mr Clarke? It is still doubtful that he, and therefore his supporters on the front bench, would overtly support a 1999 breakaway of that sort. But a respectable showing by such a grouping would carry its own momentum: for one thing, it would create a new constituency within Conservatism whose interests lay in securing PR for Westminster, thus making a "yes" vote in a referendum on Commons electoral reform all the more likely.

There is an irony here; throughout his political life Mr Clarke has been a committed first-past-the-post man. But if a referendum delivered PR for the Commons, then, and perhaps not until then, the temptation for him, and perhaps Chris Patten too, to create a new business-friendly, broadly pro-European party of the centre right would surely be irresistible.

For despite the doubts clouding the future of EMU, it still looks as though the big money in politics is not going to follow the Europhobes. Next week's report of the CBI survey on EMU will show that while the membership was divided over whether Britain should enter a single currency in the first wave - and voted on balance against it - it dismissed by a large majority the Hague notion of ruling it out for a decade. The CBI has probably never before diverged so decisively from Conservative party policy.

Conversely, Gordon Brown's speech yesterday, emphatically keeping open the option of EMU membership, emphasises the harmony between CBI thinking and New Labour's. A new Cabinet subcommittee is to consider party funding, but Blair's personal inclinations - unlike those of many in his party - have tended against state funding. It is a sign of how far times have changed that because of the parties' respective attitudes on Europe, Mr Hague may be more starved of business funding - and therefore more in need of state funds - than Labour.

All this provides the prospect, enticing for Labour, of a split Conservative party, guaranteeing a Blair premiership for several parliaments. But yesterday's decision, momentous as it is, doesn't guarantee that Mr Blair will back Commons PR (or even the not truly proportional Alternative Vote system, a compromise still being advocated by Peter Mandelson). He isn't, genuinely, yet persuaded of the case for reform. He wants the long-term hegemony that it would help to confer; but he has surely not given up all hope that he can have it without a change to the electoral system, and without presiding over a multi-party coalition.

The European elections nevertheless provide a laboratory in which to test the impact of electoral reform. Kenneth Clarke is one politician who will be waiting and watching for the results; the other is Tony Blair.