The European Crisis: Labour seals fragile unity over Europe: Opposition debate

THE LABOUR Party papered together the most fragile of compromises on Europe yesterday leaving Bryan Gould still just inside the shadow cabinet but Labour's leadership arguing that the party had reaffirmed its commitment to the Maastricht process.

The leadership overwhelmingly defeated calls for a referendum, as the shadow Cabinet and national executive committee reaffirmed the party's commitment 'to closer economic and political cooperation', a single currency in the long run, and 'a managed system of fixed but adjustable exchange rates'. Any re-entry to the exchange rate mechanism (ERM), however, required policies to strengthen the economy, the party's policy document said.

Mr Gould stayed on as Labour's heritage spokesman despite voting at the national executive with Tony Benn and Dennis Skinner in a 22 to 3 defeat of Mr Skinner's call for a referendum and 'permanent' withdrawal from the ERM.

A move by David Blunkett, the party's health spokesman - again backed by Mr Gould - to leave the question of a referendum open was defeated by 22 votes to six. Only five members of the shadow Cabinet argued in favour of a referendum at a lengthy debate on the issue last night.

Margaret Beckett, the party's deputy leader, said those calling for a referendum 'are, in almost all cases, really calling for us to leave the European Community. That issue was settled nearly 20 years ago. The Labour party sees no merit in reopening it'.

The pro-Maastricht tone of the party document, with its insistence that Britain must not be 'pushed to the periphery of Europe', was, however, off-set by Labour reviving sufficient of its old arguments about the conditions needed for ERM entry and for 'real economic convergence' before monetary union to satisfy David Blunkett, John Prescott, Michael Meacher, Jack Straw, Clare Short and others on the national executive and shadow Cabinet who have been increasingly sceptical or openly critical of Labour support for Maastricht.

Opponents of the treaty believe the conditions are stringent enough to allow revival of the argument that Labour should vote against the Bill if the Government brings it back to the Commons.

Mr Gould abstained on approving the final policy document - with only Mr Benn and Mr Skinner voting against. He told colleagues it was not the one he would have drafted, but that he could 'just about live with it'.

John Smith told the shadow Cabinet formally last night that having allowed 'a healthy public debate' over policy, collective responsibility now prevailed.

Mr Gould's acquiesence with that, at least for the moment, means he will have to bite his tongue, or at best speak in code, if he is to survive at a press conference he is chairing today where Austin Mitchell, from the party's old anti-EC wing, will attack the ERM, and at a series of fringe meetings that Mr Gould is due to address at the Labour party conference next week.

Articles appearing in the New Statesman and Tribune today, in which Mr Gould welcomes the collapse of the ERM and condemns the treaty, have been discounted by Mr Smith as being written before the curtain of collective shadow Cabinet responsibility fell last night.

But with Labour deciding yesterday to be silent on tactics on the Maastricht Bill should it return, and with the party now setting conditions on ERM re-entry, Mr Gould appears to have taken the view that with external events moving his way there is no need for a confrontation that events may be making unnecessary. However, furious internal debate - as well as public backbench debate - on the type of Europe Labour should back is set to continue.

One shadow Cabinet member described the policy document as 'a clever squaring of the circle'. Clare Short, a Labour front- bencher and NEC member, said it contained 'many nuances'. It was, she said, 'very pro the countries of Europe working together. It is not a tightly pro-Maastricht as-it-is-now document'. It still remained, she said 'open season for intelligent debate' in the party.

Labour's document provides the platform for John Smith to assault the Government in today's Commons debate - blaming the 'humiliating and total collapse' of Government economic policies not on the ERM, but on the Government's 'total failure to tackle the underlying weakness of the British economy'.

(Photograph omitted)