Leading Article: Labour must come clean on monetary union

There is something rather peculiar about the Conservative Party quite probably throwing away the next election in order to keep open an option that Britain almost certainly will not take up. It is even more strange that the issue is one which bores the pants off most voters.

American political consultants ask how an issue "plays in Peoria", the archetypal Midwest small town. The Sun this week confirmed how the single European currency plays in our equivalent, Basildon. Its Mori poll in The Town Where The Last Election Was Lost found 64 per cent opposed to replacing the pound with the euro. But The Sun's Europhobic glee was tempered by another finding: that Europe ranked only ninth in the list of issues bothering the voters there. However, the phobes are right at least in this: that the question is one of the most important facing the country, and that the voters ought to bother about it more.

The other peculiarity of the Tory Party's protracted suicide is that Labour is just as unclear about precisely the same issue. Although Tony Blair is not under the same pressure from his own party to rule out adopting the euro when it is launched in two years' time, he seems just as evasive with the voters. Partly that is because the Tories are in government, while Labour still enjoys some of the irresponsibility of opposition. But the main reason why the Tories are so much more divided than Labour is because the split is not really about the narrow question of whether or not to join in monetary union on 1 January 1999. For the Tories, much more than for Labour, the real issue is the terms of our membership of the European Union. It is becoming increasingly clear that if the Tories lose the election they will go into the following election under a Euro- sceptic leader pledged to "renegotiate" the terms of Britain's membership. This is what lends its particular unreality to Kenneth Clarke's campaign to keep the 1999 option open.

Which brings us to the party which seems at present more likely to form the government next spring. There is at least a case for arguing that Mr Blair's stance on monetary union probably now matters more to people's everyday future lives than Mr Major's views, which matter more to the future of the Conservative Party. So what is Labour's position? Last month, Gordon Brown promised that there would be a referendum if a Labour government wanted to join in the next parliament. This was significant mainly as confirmation that Britain is very unlikely to join in the first wave. Public opinion is not ready for it - unlike other European countries, where the decision was made when the Maastricht Treaty was signed in 1993. The British may not care that much about Europe, but they know what they don't like. And, frankly, the British economy is not ready for it either.

But something else important has happened in the last few months. Two of the Shadow Cabinet's leading doubters have decided that Britain cannot afford to remain outside the single currency for long. Robin Cook, the shadow Foreign Secretary, said last month: "If a single currency proceeds I personally very much doubt whether it is possible in the medium term for Britain to stay out." This could mean joining in a "delayed first wave" with Italy, in, say, 2002. David Blunkett, another former sceptic who is likely to be a powerful figure in a Labour Cabinet, agrees. As a result, John Prescott, who described himself bluntly as "not a fan of the single currency" during the party's leadership election two years ago, would have to fall into line.

Indeed it may no longer be strictly relevant what Labour politicians think of the single currency. Note that we have not heard for some time that the party is "in favour in principle". Instead, the line is that it could have benefits, but there are also disadvantages. The terms of the debate have shifted, because the single currency is now almost certain to go ahead.

But it is not too late to influence many of the important decisions about its launch. This week Helmut Kohl and Jacques Chirac failed to resolve their differences over France's demand for a more politically accountable European Central Bank. This is an opportunity for Mr Blair, because it is also Labour's policy that EU finance ministers should set the rules under which the Central Bank operates. And it is not just an opportunity for Mr Blair - it is also an opportunity for Europe. We are doubtful about the single currency in part because we are concerned that the policies of the Central Bank would be out of the reach of democratically elected governments. Mr Clark repeatedly asserted yesterday that it was essential that the Government continue being involved in the negotiations to protect and advance Britain's interests. But it is likely to be up to his Labour shadow to take the discussions forward.

Still, Labour would have very little time to engage in the negotiations if it were elected in May. That is why the leadership should start preparing voters now for the choices ahead. For too long, Mr Blair has followed in the Prime Minister's slipstream, while accusing him of being led by Tory sceptics. Mr Cook's statement is an important first step in being honest with the people, but we need to know more about what Labour intends. It has a chance to move the EU a little way towards the European Confederacy which we advocate, in which we dump the semi-mystical goal of "ever-closer union", and in which a single currency could be subjected to democratic controls so that the peoples of Europe feel that they still have a say in their destiny. We want to hear about that, loud and clear, from Labour's top table.