Labour split raises doubt over relaunch

CONTINUING open revolt over Labour policy on Europe and the economy yesterday threatened to overshadow John Smith's moves to relaunch his party's aims and objectives at the Labour Party conference later this month.

Michael Meacher, Shadow Cabinet member on overseas development, said a referendum on Maastricht would be 'the best way for resolving what may otherwise be an intractable dispute'. There were, he said, 'clearly differences in all political parties on the issue'.

David Blunkett, the party's health spokesman, having declared last week that a realignment within the exchange rate mechanism was 'vital', will today at a national executive meeting attempt to amend Agenda for Change, the document intended to set out Mr Smith's vision for his party, so that a realignment of sterling is not ruled out.

Last night's devaluation of the lira did not change his view that Labour needs to offer an alternative economic policy.

The moves came in spite of private appeals from Mr Smith and Margaret Beckett, the deputy leader, for Shadow Cabinet members to stick to the party line, particularly over devaluation, as Europe waits for the French referendum result next Sunday.

As Paddy Ashdown, the Liberal Democrat leader, condemned Labour's 'open warfare and appalling shambles' on Europe, there were signs yesterday of increasing exasperation from Mr Smith's camp at the repeated breaking of ranks by Shadow Cabinet members. Party officials say that once the referendum result is known, Labour's front benchers will be expected to back the leadership line or face the consequences once the national executive and Shadow Cabinet settle it on 23 September.

Bryan Gould - who was again on the attack over Maastricht yesterday - acknowledged that once decisions were reached 'we'll each then have to abide by that decision or get out'.

Mr Smith's camp and the phalanx of Shadow Cabinet members speaking out acknowledge that the Labour leader has the votes on both the national executive and Shadow Cabinet to prevail.

But that seems to promise at best only a strained frontbench unity on the two key issues at Mr Smith's first party conference as leader the following week. Mr Gould - who is to speak at a conference fringe meeting of the Labour Common Market Safeguards Committee, the redoubt of the old anti-European Community Labour MPs - yesterday gave qualified backing to a referendum.

If the Government attempted to bring the Maastricht Bill back after the French vote in the hope that the Danes would somehow come back on board, he said on TV-am, 'then I think it would be intolerable to foist upon the British people a very substantial loss of their democratic power to govern themselves, without asking them'. Mr Meacher said that a referendum was 'clearly the right way'. Party rifts over Europe were further underlined when 13 Labour MEPs disowned a statement backing the treaty which was circulated last week by the leaders of the Labour European group saying the 45-strong group backed the treaty. A letter to constituency parties from the 13 says: 'This is simply not true.' At least one-third of the group was opposed to the treaty, they said.