Labour promises referendum on single European currency

Labour is to offer the British people a referendum on whether they want the UK to join a European single currency, the shadow Chancellor, Gordon Brown, said yesterday.

In an interview with the Independent on Sunday, he said the decision in principle had been taken that a referendum during the next parliament was "the appropriate way of securing consent". He will spell out the plan in a speech in the City on Tuesday.

Mr Brown and the Labour leader, Tony Blair, have secretly worked out the referendum plan in the hope of turning the tables on Eurosceptics. If they believe the conditions for entry in the first wave of countries are right, they will use a popular poll to enable a Labour government to take Britain into European Monetary Union.

The Opposition's move follows several months of private talks with European finance ministers and economic spokesmen of different parties. Mr Brown said yesterday: "No major decisions will now be made in the European Union until after the general election."

Next month's EU summit in Dublin would not make final decisions on issues relevant to monetary union, such as the stability pact that will limit budget deficits in EU countries. And it is still not certain that the main participating countries will satisfy the convergence criteria.

"The next summit is not until June 1997," Mr Brown said. "It is now clear we will not know until after the general election whether European Monetary Union will go ahead and on what terms.

"We have always said that a decision should be made in the national interest at the time. That is why we say we will keep our options open. It also means that if a decision is being considered during the course of the next parliament, then a referendum at that time is the appropriate way of securing consent."

The decision brings to an end an internal policy wrangle at the highest levels in the party. Some in the Shadow Cabinet wanted to keep open the option of a clear commitment in the election manifesto to join EMU.

Mr Brown indicated yesterday that a Labour government would not rule out joining the first wave of EMU participating countries. "We see advantages in the principle of economic monetary union because of the benefits it could give in terms of greater stability, lower long-term interest rates, reduced speculation and lower currency transaction costs," he said.

But he promised that any decision on EMU would take account of employment consequences before asking the British people to undertake "an act of consent".

A senior adviser to the shadow Chancellor said firmly: "In principle we want to join EMU. What is becoming apparent is that it will go ahead, and there are substantial costs attached to the UK being left behind." Mr Brown was signalling his support for a referendum "if we are to join in the first wave or in the first parliament".

Asked about the prospect of a tax cut in the Budget next week, Mr Brown said: "Whatever happens in the coming Budget, Tory taxes will be higher at the next election than at the last, in complete breach of all their promises."

The Government had raised taxes 22 times, he said, and these taxes were the equivalent of 7p on the rate of income tax. "So 2p or 3p down cannot undo the effect of 7p up."

Tory Euro wars, page 2

Leading article, page 20