THE British Labour Party confirmed yesterday it would not fund the £60 million new royal yacht from taxpayers' money.
In a concerted media attack, senior Cabinet ministers accused the Labour Party of being anti monarchy and criticised the decision as "foolish".
The shadow chancellor, Mr Gordon Brown, had ruled out funding the royal yacht as part of the party's drive to tighten public spending. However, a Labour Party spokesman indicated that the yacht could still be built if it was financed privately.
"Hard choices have to be made as far as public spending is concerned. We've set out our public spending plans for the next two years. There is no provision in those budgets for royal yachts," explained Mr Alistair Darling, the shadow chief secretary to the Treasury.
However, the Chancellor, Mr Kenneth Clarke, argued that Britain's economy would benefit from the royal yacht and accused the Labour Party of playing party politics with the monarchy.
"Outside this country, people are fascinated by our royal family, fascinated by the monarchy. The royal family will be used very effectively for trade promotion. Inside this country, I trust that all sensible people are monarchists. We don't start making the monarchy part of party politics in this country," lie said.
A Buckingham Palace spokesman said Queen Elizabeth saw the new yacht as a national asset but refused to comment on the row over funding. "This is a political matter. It is for the British government to address this matter."
The Mail on Sunday quoted unnamed royal aides as saying Queen Elizabeth was unhappy about the way the Defence Secretary, Mr Michael Portillo, made the announcement about the yacht last week as it dragged the royal family into the pre election battle.
Earlier, Mr Clarke defended the government's "tougher" stance on a single currency, insisting there had been "no change in policy."
"I think it is unlikely anybody will start on January 1st, 1999 - not impossible but unlikely. If they go ahead on January 1st, 1999, and they've fudged the criteria, to use the current jargon, then they shouldn't go ahead and we certainly won't join them. It's not impossible. We haven't ruled anything out."
Pointing out the benefits of a single currency, Mr Clarke said he regarded Europe as opportunity and not a "collection of threats". Monetary union would lead to low interest rates and low inflation.
"The politicians would give to this European Central Bank the duty of delivering low inflation, stable prices, a strong currency, and that, whether you're in or out of EMU, is what British business and commerce require."
He said most MPs were pro Europeans who appreciated that it was "absolutely crucial" for Britain to remain in Europe.