PM free to push on the euro

Played nine, won nine. Since Tony Blair became Prime Minister, Labour has held every by-election seat it has defended. Ipswich is the ninth. This is not a unique achievement for a party in office: the Conservatives can also boast an unbeaten four-year record - but not since they were led by Winston Churchill.

Labour did not just win last night; it won well enough to encourage a degree of boldness in Mr Blair, starting with his speech today on Europe. Ipswich is no heartlands Labour seat. The town had a Tory MP as recently as 10 years ago; and when Jamie Cann recaptured Ipswich for Labour in 1992, his majority was only 265. It took Labour's landslide victories in 1997 and six months ago to create the illusion that Ipswich is a safe seat. In normal times it would be the kind of bellwether marginal that any halfcompetent opposition party would expect to gobble up in a by-election.

True, Labour's majority halved to 4,087; but Chris Mole, its newest MP, limited the swing to the Conservatives to less than three per cent. To win the next general election, the Tories need a swing of 10 per cent, and must win seats such as Ipswich. Last night, in their first parliamentary contest since Iain Duncan Smith became leader, they came nowhere near either objective.

Indeed, at 28 per cent Conservative support is its lowest in Ipswich in any parliamentary election since the First World War.

Of course, any interpretation of the figures must be qualified by the turnout of just 40 per cent. But democrats should not be too downcast. Despite Ipswich Town's European soccer match, and the absence of media attention, turnout was actually the highest in any English seat being defended by Labour for more than seven years.

What the scale of Labour's victory means is that Mr Blair can continue to lay out his plans for the rest of this parliament without having to worry that rising unemployment and continuing problems with the health service and the railways are costing him votes. In a small way, the Ipswich result may help to give the Prime Minister the confidence to act more boldly on thorny issues such as the single currency.

Certainly, careful thought is being given to the possibility of holding a referendum on the euro on the same day as the next general election, probably in 2005. Senior cabinet ministers believe that this would offer three advantages.

First, turnout is likely to be higher than in a referendum held separately - and, the argument runs, the higher the turnout, the more likely a "yes" majority. A low turnout referendum, it is feared, would help the "no" campaign.

Second, by combing the general election and referendum campaigns, Labour and the Liberal Democrats, with around 60 per cent of the total vote, would be able to coax many of their supporters to vote "yes" to the euro out of party loyalty - while the Conservatives would be handicapped by the appearance of division, with such senior politicians as Kenneth Clarke and Michael Heseltine campaigning on the euro against the party leadership.

The third advantage of holding both votes on the same day is more defensive. Suppose the referendum campaign goes wrong, and, after all, a majority of us vote "no". Were this to happen, say, a year before the general election, the result would deal Mr Blair a devastating blow. Mr Duncan Smith and the Conservatives would receive a huge boost. The subsequent general election would suddenly be open.

If, however, we voted "no" on the same day as we returned Labour to power, then the consequences would be very different. It would still be a grave disappointment to Mr Blair, for whom entry into the single currency has always been a great prime ministerial ambition. But the Tories would gain no benefit, at least in the short term. Britain would have another four or five years of Labour rule - during which, among other things, a new relationship between London and Brussels could be thrashed out.

It should be stressed that no firm decision has yet been taken. Even if the Prime Minister is currently inclined to call the two votes on the same day, all kinds of things could happen during the next three-and-a-half years to change his mind. But, for the moment, the attractions of combining the two contests look considerable.