This billionaire could do democracy a favour: Leading article

For Jimmy Goldsmith let us give thanks. His party, his network and his views are in revolt; and in part, revolting. We would be mortified if he had a chance of winning power in the next election. But he has one big thing on his side: the central tenet of the Referendum Party, no matter how objectionable its real agenda may be, is correct. There should be a referendum before Britain embraces a single currency.

Ever since the billionaire set up his Euro-sceptic party, the Tory establishment has been seething. Goldsmith's views on Europe are not, for them, the problem; a large proportion of the current crop of Conservative MPs (and even more of the new candidates) agree with him that a federal European Union is the great threat of our times. No, Sir James's offence has been to operate loudly and effectively against the Tory party. Candidates are to be fielded against Europhile Conservatives, especially those with small majorities, threatening marginal seats and pressurising wavering Conservatives to move to the right. Until John Major intervened, Sir James was even providing Euro-sceptics in the Conservative party with funding to agitate against the leadership line. No wonder so many Tory MPs hate him.

So we have a curious phenomenon: a right-wing, protectionist plutocrat, reviled by our MPs, claiming to defend democracy against them.

Up to a point he is right. To the extent that Goldsmith is supporting a referendum of the people against the paternalism of the Conservative establishment, his is a worthwhile crusade. Many voters will sympathise with his populist demand that the people should make decisions over sovereignty, rather than "a bunch of clapped out politicians".

Moreover, joining a single currency is exactly the kind of issue on which the public should be directly consulted. Whether we are excluded from the European economic mainstream while the French and Germans embrace currency union without us, or we give up control of monetary policy to a European central bank, the implications for our prosperity and our freedom to manoeuvre will be considerable. Either path will be fraught with risk, so our government needs to be backed by democratic consent before it sets out.

But let us be honest about Mr Goldsmith. His party is hardly the political wing of the Demos think-tank, campaigning to take democracy closer to the people. Catch Sir Jimmy campaigning for Scottish devolution, city mayors, or citizens' juries? Sadly not. The Referendum Party wants a referendum simply because members think that on this subject the British people will vote no. You can bet Goldsmith's party would be quick to change its name if the majority sentiment in the country started to swing in favour of the euro.

The truth is that Sir James and his pals are not just anti-euro, they are anti- anything to do with the European Commission. Yesterday, Sir James claimed that the EC was spreading "propaganda to put people to sleep so that this nation ceases to be a nation". His manifesto includes demands for an emasculated EC and Court of Justice. Failing this, Sir James thinks that Britain should withdraw from the EU altogether - a prospect which would be extremely damaging for British business and the British economy.

But Europe gets off lightly in Sir James's book compared with the rest of the world. The one consistent theme in his statements and writings is his obsession with protectionism. Only barriers to free trade, according to Goldsmith-speak, can prevent us being overrun by the tiger economies. But while trade barriers might, at a push, protect a few of Sir James's billions, the limits on trade would hurt British consumers and make our businesses and workforce less competitive and prosperous in the long term.

Of course the Referendum Party will not win power in the next election. Sir James is not about to sweep into Number 10, change the curtains and wreak havoc with Britain's European relationships. But what he might do is push the Conservative party dangerously to the anti-European right.

On the way, however, he and his cronies could do us a small service. It is no accident that Sir James has chosen to stand against the deeply unpopular David Mellor. The former Heritage Secretary - he of toe-sucking fame, who left his wife for another set of toes entirely - cheerfully devotes his parliamentary time to money-making in broadcasting and mysterious consultancies. Paradoxically, Sir James's challenge could cost Mellor his majority, and let the Labour candidate in instead.

But if we are lucky, Sir James and his party could prove the vehicle for a more important democratic change than ridding Westminster of a smug MP. Maybe the main parties will be shamed by Sir James into embracing referendums themselves. Conservatives, Labour and Liberal Democrats should recognise the value of direct questions to the public, especially on issues as important as Europe. In a mature democracy, voters should be given the opportunity to engage in the public debate and participate in decision- making.

As for those pro-Europeans who fear that the public will vote against either a single currency or even continued membership of the European Union; they should have more faith in their own persuasive powers and in voters ability to make wise judgements. Until they do, Goldsmith can use his call for a referendum to gain legitimacy for a fiercely anti-European programme, whose elements and rhetoric border on xenophobia. Sir James may not be a reliable champion of democracy himself, but he may prove the vehicle for democratising our mainstream political parties.