[A-List] UK eurozone membership

["Michael Keaney" <michael.keaney@xxxxxx>]

Brown insists euro poll winnable

Larry Elliott and Michael White
Thursday December 5, 2002
The Guardian

The chancellor, Gordon Brown, and his chief policy adviser, Ed Balls,
yesterday sent an unmistakable Treasury olive branch to Tony Blair when they
both stated publicly that the promised euro referendum could be won -
provided the economic terms were right.

On a day when the prime minister endured opposition taunts in the Commons at
question time over another significant policy difference between No 10 and
No 11 - student top-up fees - Mr Brown was seen on the government frontbench
chatting with his leader.

The chancellor had earlier been given a warm reception at the private weekly
meeting of backbench Labour MPs after defending last week's pre-budget
report which, to Labour's satisfaction, had seen him promise to borrow an
extra £30bn rather than cut public spending in the face of falling economic
growth.

None of the MPs present asked the chancellor about the widely-reported
tension over policy and the post-Blair succession that both camps have been
angrily discounting amid mutual suspicions that the other is at least partly
to blame for stirring speculation.

When asked by MPs about his verdict on the five economic tests of British
membership of the EU's single currency (which he must deliver by June 7) Mr
Brown said that "if the referendum is held, it is winnable".

In an academic lecture in Oxford last night, Mr Balls said much the same.
Quoting his boss's words, he said that, provided the Treasury's rigorous
assessment of the five tests for entry was positive, "we can win a
referendum, and win it decisively".

At the weekend it was reported that Labour polster Philip Gould had
concluded that a majority would build in favour of entry following a
positive outcome of the tests and announcement of a referendum, but this
majority would crumble in the campaign's last days to give a "no" result. Mr
Balls insisted the government's policy remained one of "pro-euro realism".

His underlying message was that history illustrated the dangers of taking
big economic decisions for political reasons.

"Getting the politics right demands that we get the economics right," Mr
Balls said. "We do not have a good track record of making these decisions
over the past century. And central to these past failures has been that
politicians and policymakers paid insufficient attention to the economics in
making key decisions, and then paid a very heavy economic and political
price when it all went badly wrong."

The Treasury is doing "preliminary and technical work" on the tests, and
last night the pro-euro Britain in Europe campaign seemed satisfied with its
statements.

The no campaign argued that, if economic factors were decisive, "they must
conclude that now is not the time to join". In the current jittery mood that
was unhelpful.

More obliquely, Mr Balls in his lecture referred to the decision to join the
gold standard in 1925, the sterling devaluations of 1949 and 1967, and what
he called "... the still painful memory of September 16 1992, sterling's
ejection from the European exchange rate mechanism less than two years after
the decision to join the ERM and following the longest recession of the
post-war period". By contrast, the Blair government had ensured that
economics, not politics, would decide the timing and manner of any decision.
Mr Balls said the tests meant the decision would be on a proper assessment
of the long-term economic case and also take account of any "short-term
transitional issues". In 1997 Labour avoided the mistakes of 1925, when
Britain rejoined the gold standard, and 1990 when it joined the ERM, "of
setting a political timetable for entry, and then anchoring the government's
credibility in the decision coming out a particular way, thereby prejudging
the economic assessment."

Making a sweeping assessment of the fight against poverty, at home and
abroad, Mr Brown found time to deploy a favourite joke to MPs. Most
chancellors either failed or got out in time, he said: "I want to look for a
third way."

· Mr Brown's integrated tax credits will cost £1bn just to administer over
four years when they come into force next year, the Inland Revenue has told
the public accounts committee. "It shows how much money he is wasting," said
Tory MP David Willetts.