Europe stays centre stage

The bitter row between Labour and the Conservatives on Europe and tax is continuing to dominate the election debate with a fortnight to go before polling day.

The Conservatives are accusing the European Commission of "outrageous" interference after it dismissed their claims that the European Union is planning tax harmonisation.

What I find frustrating is that I am longing for this dialogue with the public to be on a proper basis

Tony Blair

But Labour and the Liberal Democrats have responded by challenging the Tories to shift debate onto public services such as health and education.

Europe - and whether the UK should sign up to the single currency - shot up the campaign agenda after Lady Thatcher made her call earlier in the week to rule out euro membership for ever.

The debate rumbled on on Wednesday night with a clash over the euro between Conservative leader William Hague and Chancellor Gordon Brown.

In a speech to business leaders, Mr Brown said Conservative policy on the single currency could put Britain's economic ties "at risk".

William Hague with student Natasha Chavrimootoo

Mr Hague told BBC One's Question Time programme that the election campaign amounted to a referendum on the euro - and if Labour won, "the pound was sunk". If the Conservatives were to win, "the pound stays".

On Thursday Tony Blair will set out his stall, arguing that it is patriotic fully to engage in Europe.

Being outside the eurozone hinders Britain's capacity for playing a leading role in Europe, he will say in a major speech marking the mid-point of the campaign.

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The prime minister has also risked another row with broadcasters after telling a newspaper interviewer they were helping the Tories by avoiding discussion on health, education and the economy.

In the Independent Mr Blair spoke of "longing" for a "proper basis" in which to have a dialogue with the public.

But the Conservatives are determined to keep the focus on Europe, the day after saying that a leaked European Commission document backed their claims of tax harmonisation proposals.

Tony Blair with student Jo Balchi in Southampton

This was denied by Labour and the European Commission itself.

EU Commissioner Frits Bolkestein said: "I should also like to make it perfectly clear that I am not in favour, and will never be in favour, of any harmonisation of income taxes."

A Commission spokesman reportedly called the Tory claims "scaremongering".

But shadow foreign secretary Francis Maude has accused the Commission of "arrogant and partisan meddling in the democratic process" and it is expected to be among the targets of further Tory fire on Thursday.

Mr Maude will widen the attack further in a speech on Thursday night, criticising foreign governments and Labour for pursuing a federalist agenda.

Tebbit claim

Former cabinet minister Lord Tebbit entered the debate when he said he had been told of a pro-euro intelligence services plot to infiltrate the anti-Europe United Kingdom Independence Party.

Liberal Democrat leader Charles Kennedy turned his fire on former Tory prime minister, Lady Thatcher.

She had driven a "coach and horses" through a carefully crafted party compromise, he said.

But, like Labour, the Lib Dems would prefer to move the focus off Europe.

They plan to spend Thursday concentrating on education and proposals to recruit an extra 5,000 secondary school teachers.

Polls unchanged

Mr Kennedy and former leader Sir Paddy Ashdown are due on stage together for the last time before the election at a party rally in Bristol.

Despite the Conservatives managing to keep Europe top of the campaign agenda the latest polls are offering them little comfort.

A voter survey by Mori for Thursday's Times suggests Labour's lead is on 55% (up 1% since last week) while the Conservatives are on 30% (up 2%) and the Lib Dems are on 11% (down 1%).

A Gallup poll for the Telegraph poll suggests Labour and Tory support unchanged from a week earlier on 48% and 32% respectively, and the Lib Dems on 15% (up 2%).