Referendum decision possible before Easter

John Major and a powerful coalition of Cabinet ministers will seek tomorrow to overcome the objections of Kenneth Clarke, the Chancellor, and secure full backing for a pledge not to enter a single currency without a referendum.

Malcolm Rifkind, the Foreign Secretary, who has thrown his weight behind an early decision to promise a referendum, has already submitted to Downing Street his paper detailing the options on how to operate such a referendum.

The paper is expected to be circulated to the Cabinet today for discussion on Wednesday, holding out at least the possibility that the Prime Minister could announce a decision before the Commons rises for Easter later in the day.

Mr Clarke's decision not to attend a meeting of Group of Seven finance ministers in Lille yesterday triggered a fresh alarm in Westminster amid fears that he could be prepared to push his opposition to a referendum pledge to the point of resignation.

But Downing Street dismissed suggestions that he had remained in London for emergency talks with Mr Major on the referendum issue, pointing out that both the Canadian and United States finance ministers had pulled out of the meeting. Mr Clarke has also been heavily involved in the negotiations with Brussels over the hoped-for BSE compensation deal.

There were unconfirmed hints in Whitehall yesterday that while Michael Heseltine, the Deputy Prime Minister, agrees strongly with Mr Clarke, he could emerge as a mediator between him and the referendum pledge supporters, including Mr Major.

As some senior Cabinet ministers continued to express deep incredulity at the idea that Mr Clarke would push his objections to the point of resignation, one said the issue of whether the Euro-sceptics would seek to exploit a referendum by demanding more concessions was not an issue of "principle but tactics".

Mr Rifkind's paper does not make recommendations but is thought to lean towards the idea of a referendum coming after a Parliamentary decision endorsing a Cabinet decision.

News Analysis, page 15