BBC On The Record - Broadcast: 09.12.01

Film: IAIN WATSON reports on the growing signs that a referendum on the Euro is looming.

IAIN WATSON: If politics is the art of the possible, then a pretty tough task lies ahead for the Europe Minister Peter Hain. Opinion polls show a consistent majority of the British people opposed to membership of the Euro. Following on from major speeches by the Prime Minister, it's now Peter Hain's turn to schmooze for the single currency. ACTUALITY OF PETER HAIN: The government is in favour of British membership of the EMU. WATSON: His schedule involves shuttling from CBI receptions to student rallies; suggesting that the momentum towards a referendum is picking up pace. ACTUALITY OF HAIN: ...been left before in Europe or whether we want to be part of mainstream Europe. PETER HAIN MP: We do not want to be left behind again in another big European development as consistently we have done in the past and lost out of it and that is part of the argument that the Euro is a reality from New Year's Day. The Chancellor will be making his economic assessment before June 6th 2003, so the time scale is getting shorter for Britain to begin to make its mind up on this issue. LORD HESELTINE: I think the Prime Minister knows that he should have a referendum. I think he knows that it is in British self interest to make a decision on the single currency. CHARLES KENNEDY MP: The discussions I've had with him myself suggest to me, although he's not been explicit - this Prime Minister rarely is in my experience - that he would like to have the issue settled and settled favourably by the conclusion of this Parliament. WATSON: Pro-Europeans feel that Tony Blair should have been leading from the front all along, but Downing Street insiders tell us that it was always the plan to concentrate on public services during the first year of Labour's second term and only them move on to the Euro. So what's the reason for this apparent change of tack. Well one possible explanation lies in this document which is currently being pored over by Downing Street. It sketches out a means of reducing opposition to the single currency amongst the electorate and amongst Labour voters in particular. PROFESSOR PAUL WHITELEY: There's only about a third of the electorate who are Conservative supporters in the broad sense of this, at the moment. So there's a sense in which you don't really have to win them around, if you can win round Labour and Liberal Democrat supporters. HAIN: Labour voters will be impressed about the jobs and investment arguments as they will be about the fact that their Prime Minister, who's probably got the biggest stature of any Prime Minister in living history in Britain, he's saying, or would be saying, if we hold a referendum, please vote yes; as against Iain Duncan Smith on the Tory side and all the nutters behind him saying no. I think the public will take a very clear judgement of what's in their interests and the country's interest. WATSON: The document which Downing Street is examining is a new, unpublished analysis of the British election study. It suggests Labour voters need two things to convince them to vote yes in a referendum. Firstly, they need leadership from the government. Asked: 'when the referendum on British membership in the European monetary union, the Euro, is held, will you vote to give up the pound and join the Euro? - amongst Labour voters questioned thirty-two per cent said yes and fifty-three per cent said no. With twelve per cent not decided and two per cent said they didn't know. But asked when the Euro referendum is held, and the British government recommends entry, the yes vote went up by seven points, from thirty-two to thirty-nine per cent. While the no vote fell by nine points from fifty-three to forty-four per cent. With fifteen per cent undecided and two per cent don't knows. Secondly, the government needs to make as little mention of the pound as possible. Support for the Euro increases even further amongst Labour voters if the question simply says 'join the Euro'. The yes vote rises by five points from thirty-nine to forty-four per cent and the no vote decreases by six points, from forty-four to thirty-eight per cent. There still wouldn't be a majority amongst the whole electorate but it would give the government a much narrower gap to bridge. No mention of the pound whatsoever, would you regard that as a fair question? MICHAEL HOWARD MP: I would not regard that as a fair question but I very much doubt if we're going to get a fair question anyway. WATSON: No mention of the pound would be perfectly fair? HAIN: I'm not going to speculate about Tory arguments about for and against the referendum, what is on the ballot paper. Whatever the decision taken about calling the referendum, about what is on the ballot paper, it should be fair and free and absolutely clear to people, so there's no ambiguity about it. WATSON: Now that there's greater momentum towards a referendum, it's not just the phrasing of the question that's important; pro-Euro campaigners are also keen to ensure that Gordon Brown and his officials here at the Treasury come up with the right answers when they come to assess the five economic tests. The Chancellor said in 1997 that the purpose of the economic tests was to signify that for the Euro to be right for Britain "the economic benefit should be clear and unambiguous". But last week, the Labour Party Chairman Charles Clarke, surprised some colleagues by saying: "If it was a fifty/fifty call I would still go for it". And there now appears to be a concerted effort by Number 10's allies to say something similar. SIMON BUCKBY: I fear that the anti-Europeans will try to use the tests to demand one hundred per cent satisfaction. Well among any two economists you get at least three opinions, so there will always be a balanced assessment here. But it's important that the tests look at both the costs and benefits of the single currency, the possibility to improve our prosperity if we join the single currency, but at least as important to look at the damage to our economy if we chose to go it alone, in terms of lost trade, lost jobs and lost investment. WATSON: At the Foreign Office, the Europe Minister Peter Hain parrots the Chancellor's line that the economic tests are sacrosanct. But there are others in the corridors of power who would be happy to dilute how the tests are assessed; much to the annoyance of the Chancellor's closest ally in the trade union movement. MORRIS: We'll have to have these tests met 100% because if we fail to do that we will be bouncing ourselves into a currency, we'll be bouncing ourselves out of our jobs What confuses us and we have to ask the question, who speaks on this particular critical issue for this government. We're getting confused messages. Some days we are told its a pure economic argument, another day we are told its a purely political argument and then some days we are told it doesn't matter at all, well it does matter. HOWARD: It is not an application of those tests which will decide whether the government try and take this country into the single currency, it's whether they think they can win a referendum. WATSON: The polling on the single currency, currently being studied in Downing Street suggests that opposition to the Euro will decrease if it's seen as a new and successful enterprise. When forty million of us travel to continental Europe over the next year and get to touch and feel the new currency for ourselves, perhaps buy a few drinks with it or even some tacky souvenirs, then pro Euro campaigners hope that familiarity will breed not contempt, but consent. Add this to possibly less rigorous assessments of the Chancellor's economic tests and some say, perhaps hopefully, this points to a referendum in 2003. LORD HESELTINE: I think it's worth a small wager that the Prime Minister will be thinking of a referendum in 2003. There are a number of things that argue for 2003, first of all the familiarity, it has been introduced in Europe, it appears to be working which I think it will in Europe, our own people will have shared the experience and increasingly it's been exposed to the frustrations of not being part of that shared experience. I think the second thing which should not be discounted, is that all prime ministers as they serve their time, become preoccupied with their place in history. KENNEDY: You don't have to have the wisdom of Solomon to work out that if its a four year parliament and this issue needs to be resolved some way out before the end of that parliament, then frankly if not all roads leading to Rome, I think all indicators point towards some time in the middle of 2003. VOICE OVER: January the 1st 2002. WATSON: This advertisement heralds the arrival of Euro notes and coins in 12 European Union countries in a little over three weeks. While this gives the government an incentive for a pro Euro campaign the official line is not to talk about a referendum date here in Britain.. HAIN: I don't see any point in calling a referendum, picking a date out of thin air, 2003 or 4 or 5 or ten or next month, if we're going to lose a referendum, because its not in Britain's interests to join, so I say to those who are playing games with dates, and pushing us to run in to the this matter with their - our eyes closed, that is the best way to lose a referendum, and we're not about to go down that road. HOWARD: I think they should stop playing games. If they want us to give up the pound and join the Euro Zone they should get on with it and we should have a referendum and the country can decide. WATSON: But some of Labour's long-standing supporters say that for Peter Hain and other prominent ministers even to talk about a referendum on the Euro is a distraction which takes them away from more pressing domestic issues MORRIS: My message to government is forget about the Euro for the time being, concentrate on getting manufacturing right, concentrate on ensuring that the upward drift towards additional unemployment is in fact arrested, concentrate on the national health service and the public services. When you've done all that, then you can begin to talk about the Euro. Don't be diverted. The next general election will not be won on whether we're in or out of the single currency WATSON: While most of the EU moves relentlessly towards the introduction of Euro notes and coins, the Prime Minister's mood music on British membership has got an ecstatic response from Euro enthusiasts; but there's still a suspicion he might sell them short LORD HESELTINE: Tony Blair must know deep down that if he runs away from is he will have run away from it for two reasons, one he can't rule over his own cabinet, two because he has actually given in to the media who are broadly anti European, and the public opinion that they've influenced. KENNEDY: I think he's up for it. But I do think that voices round about him, not just from within his own party need to keep reminding him that he's up for it, and to get on with it please Prime Minister. Get on with it. WATSON: The momentum towards a referendum on the single currency looks set to pick up pace in the new year, but pro-Euro ministers such as Peter Hain have a long way to go to persuade even Labour supporters to scrap the pound; so if the government can't bank on winning a referendum in 2003, the Prime Minister could withdraw from the Euro campaign and invest his time on trying to win an historic third term.
NB. This transcript was typed from a transcription unit recording and not copied from an original script. Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy.