Without the referendum, three hurdles would have to be overcome for Britain to join the single currency in 1999: the convergence criteria must be met, the Cabinet must approve, and Parliament must also approve. Under the Government's proposal, a fourth hurdle of a referendum is erected. If any one of these four conditions is not met, Britain would not join.
It is perfectly possible that a Europhobic Cabinet will decide against joining, at a time when the majority of the electorate, fed up with having to change currencies whenever they cross a border, has swung in favour. In these circumstances the electorate would not be able to veto the decision not to join. I should be intrigued to hear the Teddy Taylors of this world explain how this was consistent with their "let the people decide" demands.