Labour and the Conservatives joined battle on the explosive question of Europe yesterday for the first time in the British general election campaign.
The Conservative leader, Mr William Hague, claimed to have unearthed an "explosive" secret document from the European Commission in Brussels supporting his contention that the European Union planned to strip Britain of the power to set its own tax rates.
"The document talks of the necessity of co-ordinating national income tax systems," Mr Hague told his press conference. "It says on indirect taxes such as VAT that a high degree of harmonisation is necessary."
But as the Commission rubbished Mr Hague's claims - and it became clear that emerging plans might actually spell
the end of the EU drive for greater tax harmonisation - Chancellor Gordon Brown turned the tables on the Tories, casting them as a party "split asunder" over Europe.
While Labour had determined to focus on education yesterday, the Chancellor engaged directly with Mr Hague after Baroness Thatcher had electrified Tory supporters in Plymouth on Tuesday night.
In a speech going way beyond Mr Hague's manifesto commitment, she declared she would "never" join the European single currency.
Mr Hague's commitment is to rule out British membership of the euro for the lifetime of the next parliament. He reiterated that yesterday, insisting that no parliament could bind its successor.
And he tried to make light of any embarrassment caused by Lady Thatcher's ardour, telling reporters: "I thought she was rather restrained compared to what she sometimes says."
The widespread view at Westminster is that Lady Thatcher privately favours Britain's withdrawal from the European Union, a point hammered home by Mr Brown yesterday as he claimed a total of 80 Conservative candidates had now broken from the party's official policy over Europe and the single currency.
Twenty-three of them, he said, had personal manifestos calling for renegotiation of the terms of British membership or complete withdrawal from the EU.
"The truth is that the Tories are becoming a party increasingly defined by division on Europe as a growing number become more explicit about their real agenda of renegotiation of the terms of membership and even withdrawal," he told Labour's press conference.
The Labour hierarchy's decision to engage the Tories came ahead of a speech later this week by the Prime Minister, Mr Blair - trailed as his most important of the campaign so far - arguing that true patriotism lies in full engagement with Europe.
Mr Hague apparently intends to focus on the euro in the full week leading up to polling on June 7th, casting the general election as Britain's last chance to save the pound. But Labour yesterday gave the impression of relishing the coming European battle, as the Foreign Secretary, Mr Robin Cook, and the Trade Secretary, Mr Stephen Byers, joined the Chancellor's attack.
Mr Cook said Mr Hague's tax harmonisation claims were a sign of a Tory desperation. "The Commission itself has described the claim as complete and utter tosh and in any case we have a veto on harmonisation. "We have no intention of allowing harmonisation, there is no threat," he declared during a visit to Cardiff where he shared a chicken tikka pizza with party supporters.
Mr Cook continued: "What the country is really entitled to know is who is it that leads the Tory Party? Is it William Hague or is it still really Lady Thatcher?"
Mr Byers said Lady Thatcher's intervention had brutally exposed the Tory party's divisions. "They are now so weak and divided that they would be incapable of leading in Europe. They would be bad for British business, bad for British interests, and bad for British jobs."
Former Conservative Party chairman, Lord Tebbit, made a dramatic intervention in the election campaign last night - alleging a dirty tricks campaign by members of the British intelligence services - in an article for the Spectator magazine.
Lord Tebbit claims that intelligence agents still associated with the secret service had infiltrated the United Kingdom Independence Party - which is challenging a number of Tory eurosceptic candidates - as part of "an establishment" bid to pave the way for Britain's eventual membership of the euro.