Creative ambiguity allowed sides to hear what they wanted to hear

The Pro-European rhetoric must almost have sounded like a Yes to the Europhiles, writes Frank Millar.

The Pro-European rhetoric must almost have sounded like a Yes to the Europhiles, writes Frank Millar.

The answer is still "No". For all the New Labour spin - and Chancellor Brown gave it all he was worth yesterday - the Labour government is still not prepared to commit to membership of the euro and trust that decision to the British people in a referendum.

That simple truth was spelt out yesterday by the Liberal Democrats' Mr Matthew Taylor, who woundingly remarked upon Mr Tony Blair's seemingly unhappy countenance and the widespread belief that the "iron Chancellor" had in fact prevailed.

Mr Peter Mandelson, once New Labour's most proficient practitioner of the dark arts, was having none of it. Even as Britain's "No" campaigners opened the champagne to celebrate winning a crucial battle (if not the war) the former Northern Ireland secretary divined the possibility, still, of a euro referendum before the next general election.

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And, in fairness, Mr Brown appeared to have given him cause to hope. True he was still saying "not yet" six years after Mr Blair's first general election victory when he announced a policy of "prepare and decide". But the Chancellor contrived to use pro-European rhetoric with such enthusiasm that, at least to Labour's most dedicated Europhiles, it must almost have sounded like a "Yes".

"Structural problems" remained and there was not yet the requisite convergence and flexibility between the British and euro zone economies. However, Mr Brown announced that the Treasury's long-awaited assessment of the famous five economic tests, and the reforms he announced yesterday, actually strengthened the government's "commitment to and support for the principle of joining the euro - showing that the gains to the country and to our businesses are greater than anticipated". Indeed while only one of the tests - for the financial services - was declared met, Mr Brown told MPs that "subject to the achievement of sustainable convergence and sufficient flexibility, the tests for investment and employment would be met". To Mr Robin Cook's ear, as doubtless to Mr Mandelson's, that sounded as if three of the tests had more or less been met. And that in no small measure explained the difficulty with Mr Brown's performance.

This was the most complex assessment ever conducted by the Treasury on a financial issue prior to the "most momentous" decision ever likely to be taken by the Blair government. And at its end it wasn't clear to Labour MPs, or the country at large, precisely how many of the five tests had in fact been satisfied.

You could, in other words, take out of this what you wanted to hear. As, indeed, the Chancellor's creative ambiguity signalled from his opening two sentences: "Mr Speaker: for many decades governments formed from both sides of this House have made the case for Britain's engagement in the European Union. And it is right that at every point we show that every decision we make on Europe is made in Britain's national economic interest."

There would be reforms - in particular in the British housing market, and local or regional pay bargaining - to push toward the necessary economic convergence and flexibility. However, the Chancellor again served notice on his European partners that he expects them to reform themselves to Britain's satisfaction, without giving any clue how he will secure reform of the European Central Bank.

Surprisingly, too, Mr Brown said he would report on progress by the time of the budget next year and then decide whether to conduct another assessment of the tests. This, coupled with the promise of a referendum bill in the autumn, fired Mr Mandelson's hope that the poll could still be held during the life of the present parliament. However, sceptics noted that the Chancellor's focus remained on "structural" problems unlikely to be resolved in the short term, and nowhere was there actually a commitment to a referendum before the next election.

Some Westminster observers also noted that - given the Blair government's failure to shift public opinion after six years in power - it would be unlikely to attempt a euro referendum next year during a debate on the new European constitution.

Which does not, of course, preclude the possibility that Mr Blair might decide to gamble all by having the referendum on the same day as the election itself - a possibility raised yesterday by the influential political editor of the Sun, Mr Trevor Kavanagh. But the road map demanded by Labour's Europhiles has not been published, and the Chancellor's historic decision was that there is a decision still to be made.